Home loan health checks are a structured way to compare your existing lender with other options in the market and identify what best suits your current situation. Typically, people choose to arrange a check of their loan every one to two years, or when certain circumstances arise, depending on their situation.
Five signs to conduct a home loan health check
Current home loans are generally reviewed by a mortgage broker. When people choose to get a review may vary based on their own circumstances and needs. There are some common situations where many people decide to see their options.
It's been over 12 months
The property market is constantly changing. That may mean that the competitiveness of your home loan may also be different from what it was. There may be changes to:
The interest rate.
Lender offers.
Cashback deals.
You may have heard of the term ‘loyalty tax’. Lenders sometimes offer different rates or incentives to new customers compared to existing borrowers. Regular reviews can help you stay informed about how your current loan compares to what’s available in the market.
The size of your current interest rate
Lenders may offer loans with fixed and variable rates, depending on their policies and the borrower’s circumstances. Fixed-rate loans are generally offered for a limited time. The loan then typically transfers to a variable rate. Some parties decide to check for alternative options at this stage.
Your loan-to-value ratio (LVR) has changed
Your LVR is the size of your outstanding home loan amount as a percentage of your property’s value. For example, if you put down a 20% deposit, your LVR will usually be 80%. As you increase your equity in the property, your LVR will typically go down. The LVR may also decrease if the property increases in value. Some parties may check with their current lender about eligibility for a lower interest rate as their LVR goes down.
You're looking for new features
Loan products may vary widely in the features they offer. The borrower’s current financial situation may influence their chance to use some features. The nature of the loan may also be a factor. Some features that many people consider are the following:
Offset account.
Mortgage repayment options.
Redraw facility.
Your financial situation has changed
There are various ways that a party’s financial circumstances can change. This may affect their current needs. Here are some factors that may affect a borrower’s risk profile and borrowing power:
- Increased income means you may have more money available to put towards your loan.
- A change in employment such as moving into self-employment or a new industry may affect how a lender views your borrowing position.
- A change in expenses may prompt you to review your loan, but if you are considering refinancing or debt consolidation, it is important to check the fees and loan terms first.
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FAA have been nothing but supportive of our needs. From financial planning to assisting us with the purchase of our home. The team are highly skilled in what they do and the level of communication was so welcoming.
- Sharyn
Disclaimer: Testimonials are individual experiences and do not constitute guaranteed outcomes. They are intended to provide general information and do not consider your individual objectives, financial situation, or needs.
Conclusion
Are you paying off the loan on a new property? You may be considering whether it meets your needs. If you’re researching home loan health check online, there are signs some parties may look at. Whether a review is worth considering depends on the individual circumstances of each person.
Are you thinking about a review?
FAA Group can provide general information on home loans and provide credit assistance under our Australian Credit Licence (ACL 388789). Financial advice is provided only by an authorised representative of Lifespan Financial Planning Pty Ltd (AFSL 229892).
