Be the master of your mortgage
Have you just been approved for a home loan? Have you been paying your mortgage for a couple of years now?
Sometimes it’s hard to know how best to manage your mortgage once you have it and whether or not you made the right decision on the features you wanted from the loan, whether you got a good interest rate deal or whether you chose the right lender to begin with.
Signing that dotted line isn’t the be-all-and-end-all!
Follow these simple tips to make your mortgage work for you over the long term.
1. Automate your repayments
Don’t miss your repayments! Set up a direct debit, make sure it’s working properly and schedule it for your payday.
2. Make extra repayments
There’s no real secret – make as many extra repayments as you can!
This will save you the most money in the long run no matter if you make your repayments weekly, fortnightly or monthly.
Here’s another little tip: make extra repayments on loans that are attracting the highest interest rate first. Interest on investment property loans are tax-deductible so that should be a lower priority.
Use our calculator to discover how much in interest you could save by making extra loan repayments.
3. Look for a better interest rate
Review your interest rate every year by calling your bank, finding out what their current interest rates are and comparing it to what’s out there. Chances are you’ll find a better deal.
Consider all types of lenders including credit unions, building societies, banks and non-banks.
How much could you save?
Well, on a $500,000 loan over 30 years, you could save almost $400 per month in interest just by switching from a 5.34% to a 4.39% variable interest rate.*
Compare the best interest rates in Australia right now!
4. Allow your home loan to breathe
Be wary of fixed rates: once you fix, you’re locked in. That means:
- No selling your property.
- No switching banks.
- No drawing equity to buy an investment property during the fixed term.
Think carefully if you’re thinking about fixing for more than three years. In five years time, you might want to sell your property.
5. Trim off ongoing fees
These costs include monthly and annual fees including those for offset accounts and any credit cards that come with the package.
Can you get a better deal elsewhere?
6. Complement your mortgage with the right options
Don’t go for all the bells and whistles if you don’t need them!
After two years, review your situation.
Are you earning a higher income? You may actually benefit from having an offset account or credit card.
7. Switch to a lender with more flavour
Review your entire mortgage every two years and see what else is out there. Ask yourself the following questions:
- Do the costs and time of refinancing outweigh the savings and other benefits?
- Will interest rates change within a year? You may save for half a year but if your lender offers reduced rates, you’ll miss out.
The lowest interest rates and fee waivers are usually exclusive only to the lowest risk Australians.
The only way you know if you’re eligible is by applying. If you get declined, you’ve added an unnecessary enquiry to your credit file.
Avoid this by talking to a mortgage broker who can shop around for you!
8. Weigh up the value of your property
It’s good to check the value of your property every 3 to 12 months. The more equity you build, the greater opportunity you have to buy an investment property.
Talk to a mortgage broker today!
Our brokers are mortgage experts and not only understand how to get you approved but can help you to review your home loan over the long term to ensure that you’re always getting the best deal.
Call us on 1300 889 743 today or complete our free assessment form if you want to start your home loan on the right foot with brokers that want to find you the best mortgage for your needs.
*Disclaimer: This example should be used as a guide only and does not constitute a loan approval, quote or an offer to lend. It is also not intended to be relied on for the purposes of making a decision in relation to a financial product.