SPRING has sprung and with it comes the perfect time to clean out the cobwebs hiding in your home loan and give your mortgage a much-needed spring clean.
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The Reserve Bank has now left the official cash rate on hold at the historically low setting of 2.5 per cent for 14 consecutive months. And, according to the minutes of the latest board meeting, it could be set to stay on hold for some time yet.
So, with interest rates continuing to hover around record lows, now really is the perfect time to take a fresh look at your home loan.
The reality is a good de-clutter never goes astray and you may even find you uncover a financial aspect of your life that needs reassessment.
And with Australia's lenders actively competing for business through sharp pricing, significant discounts and other incentives, you may find a simple spring clean of your mortgage can save you thousands of dollars.
In fact, you may find you are in the perfect position to refinance your mortgage.
Refinancing may allow you to repay your home loan sooner and ultimately achieve your next financial goal sooner.
Further, refinancing can be a great way for you to lower your mortgage repayments, consolidate your debt and even access equity in your home.
To give your home loan a spring clean, you should:
Look at your past year's budget: Investigate what aspects of your spending you can move around so you can add extra dollars to your mortgage. Every little bit goes a long way to reducing your debt, saving on interest payments as well as time off the loan term.
Get to know your mortgage: Recent research showed more than half of Australia's mortgage holders do not know their mortgage interest rate, yet it is one of the biggest financial commitments a person can make.
Consider the mortgage features: Does your loan have a range of features you don't use? You might be able to switch to a "cheaper" loan with fewer options. Or, you may benefit from a loan with more features, such as an offset account.
Look into debt consolidation: If you are struggling with a range of debt repayments, rolling your other debts into your mortgage can help you to pay less each repayment period and gain some peace of mind. However, remember that those debts will be stretched over a longer period.
Get a free home loan health check: A free home loan health check can not only help you understand what home loan features are available, but find a solution that best suits your needs. There is no obligation.
■ Richard Windeyer is a mortgage broker with Mortgage Choice. Readers should seek their own professional advice before making any financial decisions. Phone 1800 01 LOAN.
