It’s a good idea to review your mortgage from time to time, and particularly so if your fixed term ends soon. A mortgage review is a chance to check things like the level of interest you’re paying, whether you’re still getting the best deal, and if your mortgage is structured to suit your lifestyle. Take a look at some of the other benefits of a mortgage review.
Lower interest rate
As interest rates fluctuate, it’s worthwhile reviewing your mortgage to ensure you’re taking advantage of lower interest rates. Reducing the amount of interest you’re being charged can have a significant impact on your total mortgage and your monthly repayments. Even the smallest change can shave thousands of dollars off your home loan which could help you pay off your mortgage that much quicker.
Fixed versus variable
Changing from a variable interest rate to a fixed interest rate for some or all of your mortgage will impact your repayments. While a fixed interest rate provides you with more certainty in knowing exactly how much you need to pay each month, a variable interest rate lets you take advantage of downturns in the interest rate. A mortgage review helps you determine the ideal structure to suit your lifestyle.
Shorten your loan term
If you’re in a position to pay a little extra into your mortgage each month, you could shorten your loan term and get debt-free much faster. Reviewing your mortgage will also help you assess the amount of equity you have available to use for funding a home improvement project.
Refinancing your mortgage
If you do decide to go ahead and refinance your mortgage – to take advantage of lower interest rates, because your fixed interest rate term is coming to an end, or to tap into your home’s equity – it’s important you understand that there may be some disadvantages to doing so.
Refinancing can be costly in terms of the fees you’ll need to pay – some lenders may charge break-fees too - so it’s important you shop around to find a lender willing to incentivise you sufficiently to make paying these costs worthwhile.
If you have a poor credit rating or an unstable income, refinancing may not be as simple as you hoped, so be sure to weigh up your options before going ahead. To find out more about refinancing your home loan or to arrange a mortgage review with one of our advisers, get in touch with Mortgage Express.
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