A home loan review can save how much?
Is the thought of reviewing your mortgage similar to that of going to the dentist?Both require a regular check-in and both can trigger similar feelings:
- Dread - I'm too busy
- Denial - If it doesn't hurt there mustn't be a problem
- Fear - What's it going to cost (in time and money)?
If you have any or all of these feelings, maybe it's due to past experiences (like the dentist hitting a nerve while you're getting a filling)?But like walking out of the dentist when your done, how good does it feel knowing you've taken care of yourself?A home loan review doesn't need to be painful and unlike the dentist, there's no cost (to review your mortgage) just time.So the questions becomes, is it worth your time?The answer to that question is going to be different for everyone. Here's a short checklist to determine if it may be worth your time:
- Has your income increased?
- Have you paid off other debts (personal loans/leases, credit cards)?
- Do you no longer have 'dependent' children (19 or older)?
- Have expenses significantly reduced (no more private ed fees)?
- Has your loan been reviewed in the last two years?
And what's the benefit?Even though at the time of getting your loan you may have had the best rate known to man, over time things change.Not just in your personal life, but also what lenders will offer.Last month I reviewed a client who has a home loan and a couple of investment loans.They had great rates for the investment loans when we refinanced a year ago, but turns out they are not as competitive today.
So I negotiated with the current lender, and after a couple of attempts they agreed to reduce the interest rate by 0.35%. So without having to refinance, or change the loan, they will save an estimated *$2,600 of the interest in the first year on their combined debt of $964k.
With regards to the home loan, the bank we went to a year ago to finance the purchase do not negotiate on rate (but are great when it comes to borrowing capacity), so we had to look at other options.
In the last year both clients had received pay increases and rent on their investment properties had gone up. Although rates had increased, the higher joint income offset the rate increase enough to be able to refinance to a comparable $750k principal and interest home loan with a much lower-rate, and in doing so they are estimated to save an additional *$3,800 in year one!
This is not to say I can achieve the same outcome for you (because everyones situation is different), but is an example of what's possible.
You may only have a home loan, but could you save $2,600?
Or if it's investment debt/s, maybe it's possible for you to save $3,800?
Maybe you're in a similar situation and you could save $6,400 in the first year of a refinance!
What else would you rather spend that money on?