Switching Your Home Loan

Making the Switch

When your car or house insurance falls due most people check or shop around for a good deal. And yet we hesitate to review our biggest commitment – our home loan. Competition between the lenders is fierce and with home loans at such low-interest rates when and why should we review our loan?

The average home loan lasts less than 7 years – very few people stay the distance with one lender and pay out the loan over 25 or 30 years.

When should you consider refinancing? As your personal circumstances change (life events) that could be an appropriate time to reconsider the requirements of your loan.

1) Has the equity in your property increased? Perhaps it is time to consider an investment property?
2) Are the kids starting school? Does this mean saving hundreds of dollars each month in day care fees?
3) Is Mum re-entering the workplace? More disposable income is a good reason to review your financial situation and perhaps consider investing some of the new money?
4) Car loan final payment due soon? Is this a good time to invest in an appreciating asset? A new car can lose 25% of its value when driving it out of the car showroom.
5) Have the kids finally left the nest? An excellent time to consider retirement and the lifestyle you want when you reach that golden age.

What are the benefits of refinancing?
1) Lower interest rates mean lower repayments. Use these savings to make additional repayments and help pay off the loan earlier and save thousands of dollars.
2) What are costs of refinancing? Refinancing normally costs hundreds of dollars to change lenders – how soon will you recover these costs.
3) Will the new loan save you any ongoing fees each year?
4) If you no longer need the extra features of your current loan move to a simpler loan – no frills = savings.
5) Should the loan include a fixed portion and if so how long? Suitability depends on your lifestyle and your need to be flexible with your finances.

How often should I review? Annual reviews are always a good time to see if the loan is still appropriate for you. It costs you nothing and you can save you money.

For any queries please call Dave Rase on 0421 162517 or email: dave.rase@multi-choice.com.au