When, why and how to refinance your home loan
TOO often we fall into the trap of 'set and forget' when it comes to home loans, and experts say it could be costing us thousands.
Savvy CEO Bill Tsouvalas said home loans should not be looked at as a 'one-off transaction' but one to revisit and readjust regularly.
"Every 24 months, homeowners should complete a home loan health check with their trusted advisor," Mr Tsouvalas said.
"That involves getting in touch with your broker, outlining the current fees and charges and interest rate and then your broker will compare the market across 30-plus home loan lenders in the Australian market.
"From there they can ascertain whether you should stay on the plan you're on, or put it into a new home loan with better rates."
He said home owners needed to look holistically at the lifetime of the loan and the money that could be saved over the entire duration.
"Considering you're paying off a home loan over three decades, a 0.5% reduction over 30 years could potentially equal thousands of dollars," Mr Tsouvalas said.
"Too many people, once they've got their initial loan, put it out of sight, out of mind, but it really pays off to re-evaluate.
"I would guess it's something like seven out of 10 inquiries that come through get a better deal, especially now as interest rates keep going down."
Mr Tsouvalas said those considering refinancing should be aware of establishment fees and while an interest rate may appear better, it paid to do the maths.
"You need to look at the total picture because if the upfront fees are too high, even though the interest rate is lower, it might not be worth it to refinance," he said.
Refinancing was also a good time to look at your overall financial situation to check any changes to income or debt was taken into consideration and repayments adjusted accordingly.
For more expert advice about home loan refinancing, head to Savvy.