What is a Mortgage Health Check and Why Would I Need One?

Mortgage Brokers Rockingham about Mortgage Health CheckBaldivis mortgage brokers offer a smart strategy for keeping your home loan fit.

When the Reserve Bank of Australia (RBA) announced recently that interest rates would remain stable at around 2.5 per cent, it paved the way for homeowners to pause and take a look at their current mortgage.

To determine that you aren’t paying more out of pocket than you need to during the low rate period, it’s a wise idea to do a “health check-up” on your mortgage.

Examine the interest rate of your loan

Refinancing your mortgage is a common and valid option and it is possible to secure a better deal. During your mortgage health check, you can ascertain whether the current mortgage is pulling its weight for you – or pulling you under. Your future financial goals should be considered. Refinancing at a more desirable rate affords you to pocket a little extra cash each month; even a difference of 1% adds up to several hundreds or even thousands each year.

Customise your health check

Ask your lender if paying extra into the principal is allowed. The loan payments will accelerate and give you less time in paying off the loan – the loan will conclude sooner. It’s important to remember that a good mortgage should be tailored to the home buyer’s needs and not necessarily those of the lender.

Plan B

If, however, your lender disallows large lump sum payments into the mortgage balance, you may want to consider finding a mortgage that will not penalise for making early repayments by issuing fees. Reducing your balance early sounds appealing but some lenders discourage it.

Calculate and compute

There is a handy little tool called a loan calculator – and you will find it on any mortgage broker or lender’s website. However, you should check several lenders to compare the level of interest rates with each. If you are interested in refinancing, do your due diligence and shop around. Make certain the particular lender can actually lock in a low interest rate without the possibility of it rising later (often called a ‘honeymoon’ rate).

In summary, taking a few steps to ensure that your mortgage is up to current standards will save headaches, time – and quite possibly, money – down the road.

Who to Call

Taking care of your mortgage doesn’t have to be painful. You just need to have a reliable mortgage broker in Kwinana, Baldivis, Rockingham or wherever you are to help you throughout the process. Call (08) 9527 1800.