New Year's Resolutions are very topical at this time of year, but setting realistic goals you can stick to, especially when it comes to your mortgage, can be a challenge. Read below for six simple tips you can use that will make a difference to your mortgage and your finances in 2017.
1. Review your home loan rate
It is easy to set-and-forget your home loan but if you’ve had your loan for over two years, it is highly likely you’re paying more for your loan than you should be. Competition between lenders is still delivering good deals so aim to seek an interest rate of 4.3% or below.
Dedicate some time to review your home loan. In just 15 minutes you can quickly assess whether you are paying over the odds on your interest rates. The next steps is to then speak with a mortgage broker for some expert advice around specific products and lenders.
Rob Emmett, CEO of Collins Home Loans, still thinks there are opportunities for good home loan deals but he warns that low interest rates won't last forever. “As a general rule of thumb fixed rates are one of the best indicators of market expectations of future rates, and with these on the rise, we can only anticipate that there will be continued upwards pressure on rates in the coming months”, he says.
2. Shop around
Use a mortgage broker to assist your search for the right deal. Mortgage brokers are in touch with the latest changes occurring in the industry and can seek out the best options to suit your particular needs. Remember that there is no charge to use a mortgage broker and you are under no obligation to proceed with the loan.
3. Consider an off-set account
An off-set account is a savings account attached to your home loan and is designed primarily to help you save money and reduce your tax bill. Money in the account off-sets your home loan balance, which reduces the amount of interest you have to pay.
An off-set account is not available on all loans, so you may need to consider refinancing in order to obtain one. Once again, if your loan is over two years old, then it may be worth considering refinancing as an option - in order to gain this benefit.
4. Pay extra off your loan
Consider 2017 as the year to make extra payments on your home loan. Even amounts as small as $10 or $20 a week can save thousands of dollars over the life of your loan and encourage you to pay it off earlier.
5. Pay down extra credit card debt
Having your credit cards under control is an important aspect of managing your home loan. If you can keep your credit cards low, this will improve your credit rating. And so when it comes to refinancing your home loan, if you decide you’d like to borrow against your home loan for a renovation for example, you will be more likely to access a competitive interest rate.
It is a good idea to check your credit rating on a regular basis, as it can keep you motivated to improve your overall finances.
6. Buy an investment property
This would be a big goal, but perhaps 2017 is the year that you are ready to use the equity in your existing home to buy an investment property. Deciding whether you can afford an investment property will be a matter of going back over the previous five tips, such as reviewing your current finances and refinancing your existing loan for a better deal and to free up the equity in your current loan.
The next step is to then create a Purchase Plan that defines your strategy and your criteria for buying a property. It is important to use as many of the tools available to you to make an informed decision. Being able to quickly calculate your stamp duty and repayments is important to ensure you’re making the right investment choice. Use these handy home loan calculators for some valuable insights.
And on a final note, spend a few moments to get excited about the new year ahead. Identifying and setting New Year’s Resolutions is about taking charge and signaling to yourself that you hold hope for the year ahead. And when you get to the end of 2017 and reflect on the year just past, you will be proud of what you have achieved - building financial freedom for the years to come.
Contact Collins Home Loans for expert advice on your mortgage.
