When did you last spring clean your home loan?

August 27, 2014

With spring just around the corner and interest rates hovering around historical lows, now may be a good time for borrowers to give their mortgage a much needed spring clean and make sure their current home loan is still the most suitable product for their needs.

Mortgage Choice spokesperson Jessica Darnbrough said giving the mortgage a spring clean each year can often end in a pleasing result.

“A good de-clutter never goes astray and often borrowers uncover financial aspects of their life that need some reassessment or to be changed altogether,” she said.

“And with interest rates sitting at historical lows and Australia's lenders actively competing for business through sharp pricing, significant discounts and other incentives, borrowers may find a simple spring clean of their mortgage can save them thousands of dollars.”

According to Ms Darnbrough, borrowers who give their home loan a spring clean may realise that they are in the perfect position to refinance their mortgage.

“Refinancing may allow borrowers to repay their home loan sooner and ultimately achieve their next financial goal sooner.

“Further, refinancing can be a great way for borrowers to lower their mortgage repayments, consolidate their debt and even access equity in their home.”

Mortgage Choice offers the following tips as a starting point for those borrowers wishing to give their mortgage a spring clean:

1. Look at your past year's budget: Investigate what aspects of your spending you can move around so you can add extra dollars to your mortgage. Every little bit goes a long way to reducing your debt, saving on interest payments as well as time off the loan term.

1. 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.

1. Consider the mortgage features: 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 an offset account.

1. Look into debt consolidation: If you are struggling with a range of debt repayments, rolling your other debts into your mortgage can help you to pay less each repayment period and gain some peace of mind. However, remember that those debts will be stretched over a longer period i.e. your entire home loan term.

1. Get a free home loan health check: A free home loan health check from a reputable mortgage broker can not only help you understand what home loan features are available, but find a solution that best suits your needs. There is no obligation, so why don't you check you're still doing the best thing by your mortgage.

If you would like learn more about your home loan or financial advice options, call 13 77 62.