March 07, 2015
Since the Reserve Bank of Australia slashed the official cash rate to the historically low level of 2.25% in February, home loan rates have been falling.
Over the last three weeks, many of Australia’s lenders have cut up to 30 basis points from their standard variable rates. At the same time, they have hacked at their suite of fixed rates, taking home loan rates to new historical lows.
So with that in mind, now is the perfect opportunity for homeowners who have been in their mortgage for a little while to review their situation and see whether or not there is a better deal out there.
If you are keen to find out whether or not you could be boasting a better home loan with a sharper rate, follow these 10 steps:
1. Do your research:
With so many different products on the market, it is important to do your due diligence and research what options are available to you before diving in with both feet.
2. Get to know your mortgage:
Recent research showed more than half of Australia’s mortgage holders do not know their mortgage interest rate. It is one of the biggest financial commitments a person can make, so it is good to know all about it. Furthermore, the better you know your mortgage, the better placed you will be to determine which features are important to you and those that you currently have but could live without.
3. Consider the mortgage features:
Once you have understood exactly what features your mortgage has, you can determine exactly what you don’t need and what you do. Does your loan have a range of features you don’t use? You might be able to switch to a ‘cheaper’ loan with fewer options. Or, you may benefit from a loan with more features, such as a redraw facility.
4. Compare lender interest rates:
Understand what interest rates are being offered by Australia’s lenders at the moment and then compare and contrast them against what else is on the market. While interest rates aren’t everything, your perfect lender should be very competitive on rates.
5. Investigate the associated fees:
Many lenders will charge various fees, so make sure the lender you are contemplating partnering with offers competitive fees and charges. As your local mortgage broker I can compare how a lender stacks-up in terms of the fees and charges on the loan (eg. for loan features, transactions, late penalties, early repayments, top ups etc.).
6. Consider lender support capabilities:
If weekend branch access and phone support are high on your priority list, it is important to partner with a lender that offers such facilities.
7. Contemplate future commitments:
Before you decide to partner with one lender, investigate whether or not they offer a wide range of loan options to suit you, should your personal or financial situation change (eg. if you need a loan top up, access to funds for renovations or you wish to refinance an existing loan).
8. Liase with a professional:
Once you have done your research and determined whether or not there is a better product out there for your needs, it pays to engage a professional – someone who can organise the best loan for you and do all of the paperwork on your behalf. I can help you compare hundreds of home loan products from different lenders to see if there is a better one out there for your needs.
9. Check the fees:
It is important to note that there are often fees associated with refinancing into another home loan. I can help you identify whether or not the cost of switching to a different mortgage outweighs the benefits of doing so.
10. Look carefully at the contract:
Once you have decided to refinance, it is important to go through your new home loan contract with a fine tooth comb. Remember: the devil is in the detail, so it pays to make sure you know what you are getting yourself in for. Are you happy with the mortgage features and the fees associated with this product