Blog Have you had a mortgage health check?

Have you had a mortgage health check?

22 May 2014
Have you had a mortgage health check?

If you've been making mortgage repayments over a reasonable period of time, chances are you're in the swing of the routine. 

However, undertaking a mortgage health check could benefit your financial position.

From evaluating your home loan interest rate to considering your repayment frequency, there are a few steps when it comes to completing a mortgage health check.

However, it's worth the time - and this kind of check doesn't require you to set foot in a doctor's office!

What's your rate?

First it's wise to evaluate your home loan interest rate. 

Question whether you're getting the best deal, taking into account whether you're on a variable or fixed rate.

A variable rate could change - usually this happens if the Reserve Bank of Australia's (RBA) official cash rate (OCR) increases or decreases. 

This could be promising if the rate drops, but not so much if the OCR rises. 

If your mortgage repayments are causing you stress, you can alleviate this by switching to a fixed-rate loan, or at least a split-loan, for greater certainty about the fortnightly or monthly figure of your repayments.

Have a chat with a lender if you want to make sure you're obtaining the best deal for your circumstances.

Could you increase your repayments?

It's no secret that increasing your repayments can help pay off your loan faster. 

To complete a truly thorough mortgage health check, you'll need to dig through your recent financial statements. 

Look over your everyday spending and credit card statements to see if there are any unnecessary spending habits that you could kick to the curb.

If you're buying takeaway food too often, have magazine subscriptions that you don't really need or have an expensive coffee habit, try to eliminate or reduce this spending in order to contribute more to your mortgage repayments.

Be sure to chat with your lender before you adjust your payments as there can be penalties for paying your loan off too early.

You might be surprised at how significantly you can reduce your repayments. If so, consider a mortgage refinance in order to make greater regular payments, potentially at a more competitive rate.

Ask the experts

While a mortgage health check requires you to carefully analyse your finances - just as a doctor would carefully analyse a person's symptoms - you can't be expected to do this all yourself.

For instance, you could want clarification about mortgage extras available from your lender - such as a redraw facility - or you might like to develop a more thorough savings strategy. 

Whatever your questions are, it's a wise idea to consult your lender. 

They are experts and can help provide the most appropriate advice when it comes to home lending.

So don't stay in the dark when conducting a health check. After all, you might be able to spot the symptoms of an unhealthy mortgage, but you'd be wise to obtain a second opinion about how to rectify this!

Love your home

Once you've ensured you're maximising your ability to make the greatest mortgage repayments at the best rate possible, be sure not to forget what this is all for.

Whether you plan to stay in your home for a long time or maybe just a few years, it's important to keep the property  in sound condition.

While regular maintenance might not be the most enjoyable task, it will keep your property in good condition and hopefully eliminate the need for more significant and costly repairs down the track.

Keeping the garden tidy and the exterior looking fresh may help increase the value of your home, so if you do decide to sell you'll be confident of getting a good deal.