Why now could be a great time to review your mortgage

Reviewing your home loan regularly is sensible, and never more so than now where things are changing so fast.  We’ve recently seen the official cash rate slashed, and this has created a very competitive mortgage landscape.  There is plenty to consider before taking the step, and you should make sure you understand all the pros and cons.

One of the main benefits to refinancing is to take advantage of lower rates at a competitor, or sometimes even with your own lender.  Lenders will often put very competitive rates on the market to attract new customers, leaving existing customers paying more.  And the difference between one lender and the next could be thousands of dollars a year.

It could also be that your circumstances have changed since you initially took out your loan.  Perhaps you want to clear your credit cards and consolidate some debts, or want to access some equity to start that renovation you’ve been talking about.   

To make sure everything is factored into your decision, you will need to understand your existing rate, repayments, and fee schedule.  Will you have to pay LMI again?  Is there a break cost such as with a fixed loan?  There might also be other features such as offset accounts, or user-friendly internet banking for you to consider.

Your property value also comes into the equation, so we would look at some data to understand what the house or asset is worth.  

If you find an alternate option to your current loan that meets your needs and is going to save you money then it’s usually a simple decision to make.  

We can compare lots of different lenders and, if there is a better opportunity, we’re able to access it. We are always working to give you great advice that’s in your best interests.

Contact us today for a home loan health check.  You could save yourself some serious money.

How to pay off your home loan faster

Reducing the life of your loan isn’t difficult; there are many simple things you can do to cut years off your mortgage. Here are some tips that will help you be mortgage-free sooner than planned.

 Small extra repayments

One of the most obvious ways to pay off your home loan quicker is to make extra repayments. Depositing lump sums, such as a tax return or work bonus, will always be beneficial, however it doesn’t always take large amounts or windfalls to make a substantial difference – planning for regular, small cash injections can have a great impact over the life of a loan.

 Let’s say we give an extra $50 a fortnight on a $500,000 loan, that saves you $32,000 of interest over the life of the loan which in turn will save you just over two years,

 Switch your payment intervals

If you find that you don’t have the discipline to make extra repayments, then simply switching your payment structure can also help save years off your mortgage, as well as simplifying your finances if you are paid fortnightly.

 Because there are 12 months in a year but 13 four-week cycles, by switching your payment intervals from monthly to fortnightly, you are essentially paying off an extra month per year.

 Make sure you have the right type of loan

Ensuring your loan allows extra repayments without penalty will let you to make the most of bonuses or funnel small extra payments to reduce the loan principle more quickly, saving on interest immediately, while an offset account will use your savings or living expenses to reduce your principle, while still allowing you to access these funds from a transaction account.

 Offset accounts are particularly useful. Because interest is calculated daily but charged monthly, any money sitting in the account will help reduce the loan.

 Although you may have to pay extra fees for the offset or redraw account, these may well be lower amounts than the interest saved. Talking to usis the easiest way to work out whether this option is financially sound.

 Paying off your home loan faster isn’t difficult, however it does require financial discipline and expertise in ensuring the right loan features are in place.

How to speed up your home loan approval

There's no straightforward answer to the question "how long will it take to get my loan approved".  Every application is unique, so the time between your first contact with your bank or broker and approval can never be predetermined. There are, however, some things you can do to help hurry your application along.

A best case scenario for loan approval is usually two or three days.  When the client’s lending position is fairly straightforward in terms of employment, asset and liability position, along with a lower LVR, it's more likely to be a quick assessment.  If there is some complexity in employment status, property type, or loan structure this will often cause time frames to increase.  Also, if the lender has a promotion or particularly good offers on the market this can mean they're busy and therefore slower.  We are also seeing lenders ask for additional information more frequently in recent times, and this creates a to and fro which can extend approval time.  

Disclose all information

To reduce the likelihood of back and forth requests, which can delay your application, ensure your lender has a thorough understanding of you as an applicant including appropriate identification of all borrowers. Provide all the supporting and necessary documents upfront to your broker, and convey as much detail as possible in relation to your requirements and objectives and have good, current information on your financial position. The broker will need to not only have your full financial details but will also need to take reasonable steps to verify it.

Skip the valuation queue

Not all applications require a valuation, depending on the property and lending institution, and forgoing this step can save a considerable amount of time. You can also save time by having a valuation completed prior to your application, as long as it’s accepted by your chosen lender – but check with us first.

To ensure your application avoids any unnecessary delays, speak to us.