Periodical Reviews of your Home Loan – Why and How?

There is no denying the fact that hard work gets you there but the fact also remains that working smart gets you there faster. In today’s dynamic world, home loans are not a set and forget transaction and the periodical reviews of your home loans can save you thousands of dollars.

What is a review?

A review will include your financial adviser such as Kiwi Mortgages, having a close look at your lending as per your current needs to determine if you have the right loan structure, right loan amount, the right loan term and product mix, which utilises your current and future surplus cashflow towards faster debt reduction. Such review will also include working towards your long-term property investment goals.

Ideally with the same bank but if it benefits you, it may include you refinancing your lending to another lender.

There can be many events that may trigger the need for you to complete such a review with your bank or with your financial advisor. The most common events justifying a review:

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1. Change in your own circumstances, such as:

Change in your income such as promotion, increase in salary, starting a new business, or unfortunate event of losing a job or loss in the business, redundancy, etc.
Change in your household expenses or other outgoings, such as additional dependents, medical emergencies, etc.
Marriage, divorce, having a baby.
Short-term lending with non-bank lenders is ready to be moved to mainstream banks.
Purchasing an investment property, selling or downsizing/upsizing.
Construction, renovations / repairs etc.
Your current fixed rate expiry.
Consolidating other more expensive debt into a home loan, if benefits you.
Your loan structure is not suited to your current situation and needs.

2. External factors, such as:

A significant change in the interest rates, current or expected in the near future.
Changed property market conditions, such as a downward trend, may present a good investment opportunity.
Competitive offers from different banks, encourage you to refinance to another bank.
More favourable lending terms from other banks, again prompting you to consider refinancing to them.

In any case, a review once a year with your bank or financial advisor keeps you ahead in the game.

Such reviews benefit in many ways:

If your current situation has changed, your lending might require a restructure (including but not necessarily refinance).
Having restructured your lending with the same lender as per your current situation & needs may save you thousands of dollars.
The situation may also demand you to refinance to another lender, for example, due to more favourable lending policies.
Aside from more favourable terms, the bank you refinance to may offer you better competitive rates and cash back.
You could switch from high-interest rates to low-interest rates, saving you interest costs.
When the interest rates are going up, re-fixing them early could save you from future increases, but this requires caution.

What should I do for the review:
Once you find there has been a significant event in your life, make note of the event and its potential impact on you & family, financial & personal. Discuss with your bank or a financial adviser such as Kiwi Mortgages for a detailed analysis and action plan.

Please feel free to contact us at Kiwi Mortgages for any such review and we will be happy to assist.