How to Review and Restructue Your Home Loan

March 23, 2017

How to Review and Restructue Your Home Loan

It’s time to move beyond the set and forget mindset and to get proactive with your mortgage. By examining your loan regularly and restructuring you can save thousands, maybe even tens of thousands on your home loan. Let’s look at how this is possible.

Home loan products frequently change due to the lending market being highly competitive. Lenders typically wait to gain you as a customer so to do this they offer lower rates. These incentives enable you to save. But, it’s important to consider all options before making a move and critically looking at your personal and financial situation.

Step 1. Review Your Loan

The home loan you took out years ago, may no longer meet your needs. So, the first step is to review your loan.

Consider the following aspects of your loan:

  • Loan type (Fixed, variable etc.)
  • Loan balance
  • Interest rate
  • Monthly payments
  • Features
  • The next instalment date
  • Loan end date
  • Any redraw amount available (if you have a redraw facility linked to the account).

Step 2. Determine the features you want

Rather than focusing purely on a lower rate of interest you need to look at the big picture. If you have a home loan redraw facility or offset account, then these typically attract a higher rate of interest. Consequently, when comparing your home loan to others look at loans that offer you exactly that same as what you already have. Although, this is providing you are using these features. Should you discover you’re not, then consider opting for a no-frills basic loan, which will reduce your rate of interest.

Step 3. Compare the Market

Now, head over to a home loan comparison site and put in your loan amount, estimated home value, current interest rate, and interest rate type. Then look at your options.

Lastly, find out what your home value is based on today’s prices. Do this by heading over to a major real estate site and looking at recent sales data for your area. Afterwards, compare your home to others sold over the last 6-12 month. Primary considerations in your comparison should be block size, the number of bedrooms and bathrooms, and living areas. Plus, you need to include outdoor entertaining, sheds, swimming pool, solar power and air conditioning, as well as landscaping. Why? Well, these features all add value to your home. Furthermore, remember to compare your home to others with similar attributes as close to your home as possible.

Step 4. Put forward your case

If you feel like you can get a better deal with another lender, then arrange a time to discuss your options with a qualified home loan professional. They will take care of all the paperwork and could negotiate a better rate for you on your behalf. Make sure you consider the risks and benefits of refinancing before you jump in.

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