Expert Advice by Paul Wilson
21/02/2014
If you have a mortgage, whether it’s for an investment property or your own home, it’s probably costing you more than it needs to.
Here’s why: the mortgage market is a fluid, ever-changing beast. Home loan products and lending policies change all the time, based on a range of external factors including the state of the economy, federal economic policy, the Australian dollar and the prices lenders pay when of sourcing funds internationally.
This means that the mortgage rates and conditions you get today could be very different to those that your neighbour secures in 12 weeks time – even if you both use the same lender, borrow the exact same amount of money and apply for the very same loan.
For the most part, when a person gets a mortgage, they don’t really think about again until they have to. But in my view, waiting until you need to refinance or borrow again to review your loans is a flawed approach.
That’s why I always advise my clients to give their finances a “spring clean” every six months or so, and by that I mean, give them a thorough review. You need to work out:
- Are your mortgages still competitive compared to other loans on the market?
- Are any of your fixed rate loans due to expire?
- Have you made headway on a personal loan or credit card debt?
- Are you in a position to pay off some bad debts and close those accounts?
I passed this advice on to a client, Sara, recently, as she had a few home loans that she hadn’t reviewed in a number of years. Two were locked into fixed rates, but another of her loans had just come off a fixed rate four months prior.
She called her lender and found out that her mortgage had reverted to a standard variable rate – at 6.19%, it was hardly competitive compared to other loans on the market. So, Sara asked for their best rate. Within a few minutes, the operator came back to her and offered an immediate rate reduction to 5.37%. What an amazing result for 10 minutes’ effort!
Sara has saved herself around $2,150 in interest payments every year. Of course, there are probably even better deals available if Sara decides to really shop around, but she has achieved this result without having to switch loan products, change lenders or reapply for finance elsewhere. It is literally a $2,000-plus saving by making one 10-minute phone call!
It goes to show that staying on top of your loans and remaining vigilant with your finances almost always pays off. This is one of the reasons why I always advise my clients to work with an experienced and qualified mortgage broker, like the brokers on my team at We Find Finance: with a mortgage professional on your side, you can get all sorts of issues actioned with a single phone call. When you consider your own home loans, how do they shape up right now? Are they competitive and suitable for your needs, or are you overdue for a mortgage spring clean?
Paul Wilson is an Independent Property Investing Expert and the founder of We Find Houses, Educating Property Investors & We Find Finance. Paul has been educating and coaching investors since 2001. Paul provides valuable, independent guidance and support by teaching strategies on how you can invest successfully while protecting yourself from commission hungry sales agents and property spruikers. Protect yourself with knowledge, contact Paul today for a complimentary consultation on 1800 600 890 or email paul@wefindhouses.com.au
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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.
