Homeowners 101: Do you need a home loan audit?

By the resi financial blog team, 05 November 2014

Do you need a home loan audit

How do you know you’re getting the best deal from your Home Loan?

If you can’t answer this question then it might be time for a home loan audit from the professionals.

A home loan is probably one of the biggest financial commitments you will make in your lifetime. It’s not just about making repayments every month, it’s about your financial security. When you originally took out your home loan you probably spent a lot of time speaking to experts, researching the market, shopping around for a good deal that suited your personal needs at that time.

If you haven’t run a health check on your home loan in the past couple of years, then it’s a good idea to evaluate your home loan to check if it meets your current and future needs – especially if your personal circumstances have changed – but your home loan hasn’t.

1. Review your mortgages structure and repayments

There are many different features or attributes that define the structure of a home loan. The decisions you made about each of these different features will directly affect the cost of your mortgage, how much time it takes to pay off your loan and the financial security it provides you.

First time borrowers often focus their attention on the certain details of the home loan, such as the difference between lenders fees and interest rates. However, it may be time to re-assess your home loan against your current situation to review the bigger picture - such as the length of the loan term (the number of years it takes to repay your home loan), payment type (P&I or Interest only) and rate type (fixed or variable).

Do the choices you made when you first took out the home loan still work for you?

2. Speak to a professional to get an assessment of your current situation

An assessment of your current situation with a home loan professional could help you determine whether your current home loan structure and repayments are working for your current and future lifestyle. Based on this assessment, a home loan professional could make recommendations that align your home loan with your current situation, taking into consideration future goals.

These goals could be anything from putting your children through university, refitting the kitchen, or being able to retire early. Things to consider could include:

- Your current or future employment situation

Have you or your partner experienced a change in income over the years since taking out the home loan? If the household has seen an increase in income, you may be able to make higher repayments. If you or your partner has seen a decrease in income or redundancy, then you may wish to consider reducing monthly repayments.

- Changes to your personal situation

Have you recently found out that you are expecting? Or have you recently popped the question to your fiancé? If so, your personal circumstances are likely to change in the future and this will impact on your financial commitments. It may affect how much you can afford every month. 

- Investment Goals

Refinancing your home can be a great way of releasing some of the equity tied up in your home. You could use this extra money to buy an investment property or carry out the home renovations you have been planning for years – to help increase the value of your home.

Alternatively if your home loan is for an investment property, you may want to compare the financial goals you set out for the property against last year’s performance. Is your investment positively geared or is the cost of owning your investment property outweighing the income it is generating for you?

Your home loan shouldn’t be something that you file and forget about. Get an audit of your home loan today, as well as recommendations specific to your current lifestyle from the experts at Resi.

Categories: home loan refinancing, Refinancing home loan