The start of a new financial year is an ideal time to review your home loan – it can put money back in your pocket.
Taking a few minutes to take stock of your mortgage makes a lot of sense. As a major financial commitment, your loan is likely to be one of your household’s largest outgoings. So it needs to provide you with a competitive rate while still providing flexible features.
How does the rate compare?
You don’t have to wait for the Reserve Bank to cut rates to get a better interest rate on your loan. It’s possible to make big savings by switching to a cheaper mortgage – do your research and compare your home loan against other home loans in the market.
Check the fees
Ongoing monthly fees do little more than add to the loan cost, yet it’s an expense that can easily be avoided.
Review the timing of repayments
Life’s a lot easier when your loan repayments are timed to match wage or salary receipts. Check if your loan offers the flexibility of weekly, fortnightly or monthly repayment options. It’s a simple way to manage household cash flow.
Check if you are paying for redraw
Making extra payments on your home loan is an easy way to pay off the loan sooner. With a redraw facility, you may be able to access some of your extra repayments in an emergency, noting the amount available reduces over time and there are some conditions on gaining access. Some loans charge a fee for redraw, taking the shine off this useful loan feature. If you’re interested in a redraw facility it could be worth looking for a lender which provides redraw at no additional cost.
Offset is worth a look
If you have some cash savings it could be worth thinking about an offset account. An offset account gives you the ability to reduce the amount of interest you pay, by offsetting the interest payable on your variable home loan balance with the funds in your transaction facility.
These offsets can include all of your monthly income, together with other available funds and savings. After this money goes into your account, you can still use it for your everyday transactions – such as making purchases and payments. The more money you keep in your offset account transaction facility, the less interest you pay on your home loan.
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