Getting a mortgage can be one the biggest financial decisions you ever make, but it doesn’t have to be a burden.
There are ways to reduce your monthly mortgage repayments, which can save you thousands over the life of your loan
Savvy Finance CEO and managing director Bill Tsouvalas says the first step in lowering your mortgage repayments is to find out whether you’re paying more than you should be.
It’s called a ‘home loan health check’, and it will very quickly determine whether there are better loan deals out there.
“It’s probably best to do that once every couple of years,” Tsouvalas says.
“It’s going through your home loan and comparing that with what’s currently on the market. Nine times out of 10 there’s an interest rate that’s better than what you’re currently paying.”
In the same way that the value of your home should change over time, so too should the interest you pay on it.
Tsouvalas says complacency prevents people from seeking a better deal and refinancing their loan, even though there are dozens of potentially better options available.
A good mortgage broker can help you find a better deal.
“People get complacent. They don’t ever think about it, they’re busy doing other things,” Tsouvalas says.
“Some people might view it as a bit of a pain in the bum, but if you employ a mortgage broker to handle the process … it’s really simple,” he says.
“It’s about identifying that there’s a better interest rate in the market place, with better fees and terms.
“All you need to do is provide two pay slips and a driver’s licence and we can take care of the rest.”
When it comes to reducing repayments, consider using your home loan to help you pay less on other kinds of debt you may have such as a car loan.
If you’ve built up equity in your home, you may have the option to consolidate the other debts you may have, such as personal loans or credit cards, into your home loan.
Instead of paying the typically higher interest on those debts, you may be able to take advantage of the usually lower home loan interest rate and save on overall interest.
“A great way of (home owners) reducing their overall monthly expenditure is by having a look at those high-interest loans that they’re paying and if there’s equity in their property, they can consolidate those debts into their home loan,” Tsouvalas says.
“There’s pretty much no scenario that I’ve ever come across where you consolidate your high-interest personal loan debt into your mortgage and the repayment is higher or the same as what it would be if you maintained those high-interest loans or credit card debt.