From all of us here at Loansuite, we wish you a very happy, healthy and prosperous new year ahead. We’re optimistic about what 2022 has in store for us, and we sincerely hope that it’s a great one for you too.

The new year can be a great opportunity to check the status of your current home loans and assess whether there are improvements you can make that could save you money going forward.

This week we’re exploring our top tips to carry out your home loan health check. Whether you just have a mortgage on your own home, own a portfolio of investment properties as an Australian resident, or you’re an Australian expat and you want to explore whether there are improvements you could make to save you money, this post will be a handy checklist for you.

Let’s dive right in.

  1. Set yourself a finance or property goal for 2022

When it comes to your plans for the new year, it’s important to set SMART and importantly, trackable goals that you want to achieve. Whether it be buying another investment property, paying off extra money from your mortgage each week or month, or looking to adjust your loans to shave your interest rate, it’s important that the goal is meaningful to you.

We genuinely believe that a goal that isn’t tracked is really just a wish, so before you even get started, set up a plan for how you’ll track it. Whether it be a notepad for your goals that you keep on your desk, or an excel spreadsheet, or even an App, set yourself a regular reminder in your calendar or task management tool so that you can check your progress on a regular basis.

  1. Review your interest rate with your mortgage broker

Given that interest rates are at record lows, and owner-occupier rates are in the 1’s and 2’s, and most investor rates in the 2’s, you could be saving a considerable amount or reducing your mortgage that much faster by simpler refinancing or requesting a discount with your current lender. Your mortgage broker can work with your current lender to secure a discount in many cases, which you may not have thought possible, so it’s often worth asking the question. We very rarely speak to a new prospective client with an existing loan that we’re not able to create some savings on for them.

  1. Review the frequency of your repayments

Did you know that something as simple as increasing the frequency of your repayments could allow you to pay off your home loan faster? Let’s assume a simple example of a $600,000 property purchase, with a $480,000 loan at an interest rate of 4.5%. The total interest paid over a 30 year loan period would be as follows depending on the frequency of your repayments:

  • Monthly – $395,552.22
  • Fortnightly – $395,135.16
  • Weekly – $394,956.38

By simply changing the frequency of your loan repayments from monthly to weekly, you’ve just saved $595.84. While you might be thinking this isn’t a great deal of money and certainly isn’t going to change your life, and chances are you’re right, but remember you haven’t actually contributed any extra money and it hasn’t cost you anything to make this saving.

  1. Are you using an offset account or redraw facility?

This is where it starts to get a bit more complicated as we start to bring tax-deductibility into the equation, so it’s important to seek professional advice here. In simple terms, if you’re looking for a way to earn a return on your emergency fund, then an offset account could be an option worth considering. Most banks are going to provide a return of significantly less than 1% on your savings, whereas your offset account could be saving you 2 – 3% depending on the interest rate on your mortgage.

If you have a redraw facility set up and are making the mistake of assuming that this will serve the exact same purpose as an offset account, it’s time to speak to your investment-savvy mortgage broker to discuss your future strategies, as these two options would have significantly different tax outcomes.

  1. Get rid of any bad debt

If you have credit cards that carry forward balances that you’re being charged interest on, or if you have personal loans or store cards that you’re being charged for, now could be a great opportunity to review your options for both refinancing this debt, and perhaps using your home loan to do so to reduce the interest expense, while you also develop and implement a plan to get rid of these bad debts altogether.

Credit card interest rates, in particular, can be exceptionally high, with rewards card rates often above 20% per annum, and this can make it very difficult to get ahead financially if you’re being hit with this charge every month.

If you’d like to explore your options for how you can create some extra savings in 2022, or get ahead financially, reach out to our team at Loansuite for a complimentary discussion on how we might be able to assist you.

We wish you a very Happy New Year ahead.

 

 

LoanSuite Pty Ltd is your lending partner for all of your home loan, investment property, business, and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.

Book an obligation-free, complimentary consultation here today.

LoanSuite Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.

 

 

Comments

comments