Now that we’re well and truly into 2021, it’s time to stop making excuses on how you manage your home loan. We know how it is – whether it’s the interest rate you’re unhappy with or you’ve outgrown your current features, it can be so easy to put off making changes until another time. After all, that’s a future problem, right? Wrong. Whether your goal is to save more money, invest in another property or pay off your home loan sooner, a new year can create the perfect opportunity to wipe the slate clean and start working towards your goals. Stop procrastinating and start doing with these suggestions for 10 New Year resolutions you could make towards how you manage your home loan.
Want to more efficiently manage your home loan but don’t know where to start? A home loan health check could be the perfect way to identify any blind spots. Like the saying goes, you don’t know what you don’t know. As a bonus, it’s one of the easiest resolutions on the list to tick off. Start by getting your ‘RefiRating’ below.
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If you have built up enough equity in your current home and are looking for a new challenge, investing in another property could be a potential goal for 2021. To work out whether this option is right for you, check your current equity and seek professional advice to evaluate your options.
We’ve been saying for over 12-months now – interest rates are at record lows, so if you’ve been on the same interest rate for two years or more, it’s more than likely you could be eligible for a better deal. Whether you prefer a variable or fixed interest rate, look at what other banks and lenders have to offer and decide whether refinancing your home loan to a lower rate could be an appropriate resolution for 2021.
Sure, your current home loan features might have served you well when you first signed up for your mortgage, but are they still acting in your best interests? Whether you’re paying a premium for an offset account you never use or would like to investigate a split loan, updating your home loan features could allow you to more efficiently manage your home loan.
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2021 could be the year you strive to get more value out of your monthly repayments by working to manage your home loan as efficiently as possible. Depending on your situation, this could mean:
Depending on how long you’ve had your mortgage, you may be in a better financial situation than when you first signed up, such as if you’ve received a promotion at work or gotten better at saving. If your goal is to pay off your loan as soon as possible, investigate what your maximum repayment options are and whether there are any consequences for paying off your loan before the loan term. In some cases refinancing might also be an option.
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While there is a lot of talk of budgeting when you first start saving for a deposit, the conversation tends to dissipate once you’ve secured the loan. In terms of paying off your home loan as soon as possible, unnecessary spending can be just as much of a hinderance when you’re servicing a home loan as it can be when you’re first starting your home-buying journey. To cut our unnecessary spending, we suggest you define your savings goals, evaluate your current spending habits and budget accordingly. Who knows? You might be able to free up extra funds to put towards your home loan or even have enough left over to consider other investment options.
While this option won’t suit everyone, consolidating other debt into your home loan (such as debt from a personal loan or car loan) can help reduce the overall interest you pay, giving you more money to put towards your home loan. It can also make it easier to manage repayments through simplifying the number of providers you need to pay back each month.
By moving to weekly or fortnightly repayments – rather than monthly – you could effectively squeeze in one extra repayment per year. This is because while there are 12 months in a year, there are 26 fortnights – the equivalent of 13 months.
While not suited to everyone, for those with a high amount of savings an offset account could be a worthwhile option. A 100% offset account works by ‘offsetting’ your savings against the amount you have left to pay off on your home loan, reducing the overall amount you spend in interest. Learn more: What is an offset account?
Words by Kathryn Lee
Has your lender made the cut? Take advantage of when lenders start dropping their rates. Talk to us if you need help organising your refinancing or a pre-approval!