How much time do you spend thinking about your mortgage? Sure, you make all the monthly repayments, but when was the last time you sat down and completed an annual review of your home loan?
Many people may feel that this is unnecessary – after all, the terms don’t really change, and they were happy enough with the home loan when they first signed up.
But this kind of thinking could be financially detrimental, which is why it is so important to annually review your home loan. An annual revision is important because:
- Life is Constantly Changing: The home loan that suited you 5 years ago won’t necessarily be the best option for your current needs. Perhaps you’ve changed jobs, gotten married, gotten divorced, had kids or seen them move out of home. You may be interested in upsizing, downsizing, renovating or investing in another property. An annual assessment of your circumstances will ensure your home loan stays in sync with your life.
- It Can Help You Achieve Your Financial Goals: When you first took out a mortgage your financial goals may have been quite simple: you wanted to buy a house. But have those goals changed over the years? Would you like to be paying your mortgage off faster? Do you have debts that you could consolidate? Are you interested in investing in shares or expanding your property portfolio? If so, you may be able to reach these goals faster by changing to a new lender.
- Lower Interest Rates Might Be Available: The Reserve Bank of Australia cut interest rates 3 times in 2019, but not all lenders passed on these rate cuts. If you’ve had the same mortgage for longer than 2 years, then chances are you’re no longer getting the best interest rate available. Reviewing your interest rate every year will help ensure your mortgage stays competitive.
- The Equity in Your Property May Increase: Property values across the country have seen an overall increase across the last 5 or so years. If your property is worth more today than it was when you first signed up for your mortgage, then your home equity has likely also increased. This improved equity could enable you to borrow additional funds (for investment purposes or to complete a renovation) or it could make you eligible for a refinanced lower interest rate.
- Fixed-Rate Terms Expire: Even if your mortgage originally came with a fantastic fixed interest rate, after a set number of years (typically 1-5) this fixed-rate term will expire. At that point, you’ll be automatically switched back to your lenders’ standard variable rate. Keeping an eye on when your fixed-rate term expires can help you to evaluate whether you’d be better off sticking with your current lender or refinancing to another fixed-rate.
If you’d like help reviewing your current home loan, then the experienced team at Sunshine Coast Financial Solutions would be happy to help.