Sep 24, 2020 9:17:59 AM

When Did You Last Review Your Mortgage?

Topics: Mortgage Advisers, First Home Buyer, Buying and Selling Property 0

Home loan interest rates have fallen to historic lows in 2020 and economists are predicting even lower mortgage interest rates in the months ahead in response to the economic fall-out from COVID-19. Lower interest rates mean more opportunities for both homeowners and first home buyers looking to enter the market, with more affordable repayments and the potential to get debt-free faster. If you haven’t reviewed your mortgage in a while, now’s a good time to do that.

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OCR On Hold

Earlier this year, the Reserve Bank dropped the OCR to 0.25 per cent and indicated it would likely remain at that level for another year*. As a result, economists are forecasting an even further drop in mortgage rates over the next few months, with fixed-term mortgage interest rates predicted to dip below 2 per cent.

NZIER principal economist Christina Leung said**, “Interest rates both here and abroad have fallen sharply as central banks around the world embark on an extraordinary amount of monetary policy stimulus aimed at lowering interest rates to encourage spending and investment.”

Make Your Home Loan Work

As a homeowner, it’s important you review your mortgage at least once a year to ensure your home loan is working for you. If you haven’t reviewed your mortgage in sometime, look out for these signs to let you know you’re due a mortgage review:

• Your fixed rate is ending: Before you decide to re-fix your loan or switch to a floating interest rate, have your mortgage adviser go over interest rate and loan options that may be available to you. You may even decide to refinance with another lender to take advantage of a more favourable financial solution. Your mortgage adviser is in the best position to help you make a more informed decision.

• Your financial situation has changed: 2020 has certainly been a challenging year. If you’re struggling to meet your mortgage repayments due to a lower income or you’ve been hit with unexpected costs, a mortgage review could help you decide on a way forward. Refinancing to a new interest rate, extending the length of your loan term, opting for an interest-only loan for a short time, or even deferring your mortgage for a few months may help you get back on your feet again.

• Your income has increased: I you’re earning more or you’ve received an unexpected bonus, you may be able to increase your repayments to shorten your loan term and save on interest charges, or make a lump sum payment to greatly reduce your total debt.

• Life changes ahead: A new marriage, baby or divorce can impact your financial situation, so it’s worthwhile reviewing your mortgage to see if a home loan restructure could help cushion the economic impact of a change in your lifestyle.

• You’re considering a renovation or remodel: Using the equity in your home to finance a renovation or remodel of your home could be the ideal way to cover the costs and improve your home’s value without taking on expensive personal loans.

• Consolidating your debt: Juggling several types of debt has the potential to quickly spiral out of control. Consolidating all of your debt – personal loans, car finance, credit card – into one repayment at a much lower interest rate makes good financial sense.

Get Help Reviewing Your Mortgage

As your financial situation and lifestyle change, so too should your mortgage. Likewise a change in the economy – such as record low interest rates – could signal the right time for a mortgage review. The key to successfully managing your finances lies with regularly reviewing your mortgage to ensure you’re getting the best deal available to you.

Take control of your financial situation today, and get in touch with Mortgage Express to find an adviser in your area who can assist you with a review of your current home loan, or help you find a pathway to owning your first home in the very near future.

Reference:

* https://www.rbnz.govt.nz/news/2020/03/ocr-reduced-to-025-percent-for-next-12-months

** https://www.stuff.co.nz/business/money/300095811/get-set-for-interest-rates-below-2-bank-economists-say

For more tips and advice around managing your money, consolidating your debts, or applying for finance, follow Mortgage Express on Facebook and Twitter, or contact one of our mortgage advisers.


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While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.

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