Do you want to shave years off your home loan? If so, the following tips and tricks will help you to maximise your repayments so you can use the savings to go on holidays or buy a new car.
Tip Number 1 – Review your current mortgage rate
Each year, the bank slowly increases their mortgage lending rate and blame it on “increased operational costs” or “wholesale market movements”. However, instead of accepting their increases, you can review your current loan to assess whether the loan you signed up for is still the best option for you. The bank is not obligated to tell you about the lowest rate they can offer and it’s up to you to be vigilant and constantly review it. We suggest reviewing it each year when you’re completing your tax return so you can make a clear financial assessment.
Tip Number 2 – Mortgage Fees and Added Extras
Are you paying for any added fees or extra charges along with your mortgage that you might not need? Is there an annual fee? If so, is it competitive? And what exactly do you even get for it anyway? Are there fees for redrawing money from your loan? Are you paying for insurance as part of your mortgage and if so, when’s the last time you checked whether you need it, or it’s even worth it? All these fees and extras can add up significantly to how long it will take you to pay off your mortgage, so check it out.
Tip Number 3 – Maximise Your Offset Account
An offset account is a bank account that is linked to your mortgage. Any money you place into the offset account is deducted from the mortgage loan balance when the bank calculates your interest. Therefore, you don’t have to pay interest on it. For example, if you have $10,000 in your offset account and a mortgage of $300,000, then only $290,000 incurs interest. So, any money you have should reside in your offset account until you need to use it. Especially in these days of low interest being earned on savings accounts, an offset is a great way to turbocharge your home loan payment time.
Also, you should explore getting your work to pay your income directly into your offset account, as with most offset accounts the interest is calculated daily, so even if you spend all of your money week to week you still get a benefit.
Tip Number 4 – Negotiate With Your Bank
Banks constantly offer NEW customers better mortgage rates than they offer their loyal customers (YOU). As a loyal customer, if you don’t look at your home loan rates then you could be leaving a lot of hard-earned money on the table. Your bank knows this and most rely on you being lazy (or confused) and not reviewing your home loan. So, you should be vigilant and either negotiate with your bank, or get us to do it for you.
Often, by letting them know that you are onto them and willing to switch banks if they are unable to help you secure a better loan, this will be enough to get a better deal. Worth a shot!
Tip Number 5 – Utilise a Mortgage Broker
Record numbers of Australians are now using a mortgage broker rather than a bank directly (circa 60%). It would be 100% but there is a common misconception that you have to pay a mortgage broker directly, but that is not the case. The bank pays a mortgage broker for referring them business, for each successful loan application. Hence it is in a broker’s interest to ensure they find the right loan for you, so their roughly 20 hours work is not in vain! The expertise that a great broker should have, in conjunction with their association with many lending institutions, means they can look at a large range of options and shortlist a few for your specific needs.
At Fidget Money, we have a circa 95% loan application success rate and have helped our customers secure over $100 million in loans for first home buyers, people refinancing their home loans and those who are refinancing for other reasons (such as holidays, buying that car you dreamed of, or even another property purchase). There are many happy customer case studies you can see HERE.
Get in touch with us for a no obligation free consultation to see how we may be able to help.
Fidget Money is a team of full-service mortgage brokers who hold strong relationships with 35+ Australia’s major ﬁnancial lenders.