Mortgage-reviewThis is one of the most asked questions in the mortgage home loan space. The simple answer is every day!

Every day you should be asking yourself how much extra I can put onto my home loan to save interest and in turn reduce the term of my loan. Your home loan mortgage is, in most economies the single largest debt you will have acquired at that particular point in time and it is in every one’s interest excepts for the Banks, to reduce your loan as quickly as possible.


Reviewing the ability to deposit any extra cash off your home loan will have a huge impact. For example, take a $400,000 home loan at say 5% p.a.(variable rate) over 30 years. The standard monthly repayments would be $2,147 and by simply paying off an additional $200 per month ($50 p.w) the interest saving is $ 74,140 and the loan term has been reduced by 5 years and 2 months to 24 years 10 months, assuming you start the extra repayments from the start of the loan.


What an incentive! By simply managing your budget and reviewing what you can pay off extra each week, you could save as much as $74,140 from your mortgage over the life of the loan. The process of reviewing your loan every day, as life gets in the way is sometimes not practical, however, you should review how much extra you can make in extra payments whenever you’re reviewing your budget. Use the Reserve Bank of Australia meetings and subsequent announcements about what has happened to interest rates, going up, on hold, or going down as your reminder to review your mortgage.


As at November 2014 the Reserve Bank of Australia announced the official cash rate was on hold at 2.50%, so what does this mean to your mortgage rate? All Australian lenders will review their interest rates generally in line with the Reserve Bank announcements; however some have their own timetable. It’s important to take these announcement timings to review your current interest rate on offer and seek assistance from your Mortgage Broker to review your mortgage to make sure you are in the market for best rates. We advise our clients to review their home loan every 12 months, generally on the anniversary of the settlement of their loan.


When did you last review your home loan, to see how much extra you may be able to tuck away to reduce your interest and term of the loan? When was the last time you took a holistic look over your finances?


At First in Finance we have a wealth of experience to discuss your requirements and discuss these options for you and let you know where you sit in the market place and how much you can save, if you make extra repayments and obtain a better deal in the market place. Get in contact with one of our team members today!


Bronko Kozel – First In Finance


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