Have you talked to a mortgage broker about your home loan lately? At Smartline Rockingham, we are always happy to go over your home loan and make sure it is serving you the way it should. In fact, we recommend a “spring checkup” once a year.
Look at it like getting a yearly physical examination from your doctor. The home loan business changes every year. In Rockingham and the surrounding community, home values can “spike” when a suburb like Baldivis becomes the “hot suburb” in the Perth market. Interest rates change. Legislation forcing banks to have a higher ratio of home loans to investment property loans has changed a lot of terms and conditions.
No matter which way the market goes, it is smart to talk to a mortgage broker about your loan and see what your options are. At Smartline Rockingham, we have access to 28 different lenders. We know the tendencies and preferences of those lenders and it allows us to find the right lender for you. Sometimes, finding the right lender can save you thousands of dollars over the life of a home loan.
Here are four factors to think about when looking at your home loan.
Repayment Schedule
If you are on a monthly payment schedule, you may want to consider going to a fortnightly or even weekly repayment schedule. This pays your loan off faster for two reasons. First, there are 52 weeks in a year but only 12 months. 52 weekly payments or 26 fortnightly payments are the same as thirteen months of payments. That means you are paying one extra month a year and you don’t even notice it.
Another reason is that interest is computed on every repayment. We won’t get into complicated mathematical formulas here, but suffice to say that you would pay off your interest a little faster with weekly or fortnightly payments even if you weren’t paying that “13th month” every year.
Offset Account
An offset account is an account that is linked to your home loan. When interest is being computed, the balance of the offset account is figured into the mix. The result is that you pay less interest. This means that your money is working for you to help you pay your home loan off faster instead of just sitting.
Fixed Rate vs Variable Rate
A lot of people are taking advantage of record low interest rates to fix a low rate for five years. Even if rates aren’t at record lows, you have the luxury of knowing exactly how much your repayments will be for that period of time. On the other hand, variable rate loans often come with more friendly terms and conditions.
There is no “one size fits all” answer. The best route is to have a mortgage broker look at your loan. You may choose fixed rate, variable rate or a combination of the two. Whatever the choice, it’s great to know your options.
Your Home Equity
When housing prices rise, it creates equity for you in your home. Obviously, making repayments also creates equity. It’s good to know how much equity you have in your home at any given time. You may want to refinance your home to use some of that equity.
You can use your equity for anything you want. A lot of people like to use it for the deposit on an investment property. Nearly as many like to use their equity to renovate or expand their homes, building their “dream home” along the way. Do you want a new car, a boat or a “once in a lifetime” vacation? The possibilities are endless.
Talk to the Professionals
Talk to a professional mortgage broker at Smartline Rockingham. Remember that we do this for a living. Five days a week, we are working with numbers, terms and conditions, types of loans and ramifications of interest rates. We know how to help you maximise your loan.
Do you feel like you are working for your home loan? Maybe it’s time to have your home loan work for you. Call Smartline Rockingham today: (08) 9527 1800.
