A home loan is not something you should set and forget. It might have been the right loan when you took it out. It might have suited your income, your property, your goals and the market at the time. But life changes.
The best question to ask is, “Is my loan still working for the life I have now and the plans I have next?”
A loan review is about more than the interest rate
A lot of people only think about reviewing their loan when they see a lower rate advertised elsewhere. That is understandable because a small difference in rate can have a meaningful impact over the life of a loan. ASIC’s Moneysmart notes that even small differences in mortgage interest rates can make a big difference to the long-term cost of a home loan. But a good loan review should look beyond rate alone.
It should consider:
- Your current repayments
- Your loan structure
- Your offset account
- Your redraw setup
- Fixed versus variable portions
- Your lender’s current pricing
- Your equity position
- Your future borrowing plans
- Your cash flow
- Whether your loan still suits your goals
Because the cheapest-looking loan is not always the smartest structure.
When should you review your home loan?
As a general rule, it is worth reviewing your loan at least once a year. It is also worth reviewing it when something changes.
This might include:
- Your fixed rate ending
- Your income increasing or decreasing
- A new baby or change in household expenses
- Starting or selling a business
- Buying another property
- Renovating
- Paying down debt
- Wanting to invest
- Changing jobs
- Separating or restructuring ownership
- Feeling like repayments are becoming uncomfortable
You do not need to wait until something goes wrong.
Often, the best time to review your loan is before you need to.
Signs your loan may deserve a second look
- You have not reviewed it in over 12 months
If your loan has been sitting untouched for a while, there may be better options available. That does not automatically mean you should refinance. Sometimes your current lender can sharpen their offer. Sometimes the cost of moving does not stack up. Sometimes your current structure is still right. But you will not know unless you check.
- Your property value may have changed
If your property has increased in value, your loan-to-value ratio may have improved. That can sometimes open up new options. You may be able to refinance, restructure, access equity or negotiate with your current lender. Again, this depends on the full picture. But property value can be an important part of the review.
- Your income or expenses have changed
A loan that suited your household two years ago may not suit you now. Maybe your income has increased and you want to pay the loan down faster. Maybe your expenses have increased and you need more flexibility. Maybe you are self-employed now and your lending position needs to be handled differently. Your loan should support your cash flow, not work against it.
- You are thinking about buying again
If you want to buy another property, your existing loan structure matters. The way your current loan is set up can affect your borrowing capacity, equity access and future strategy. This is especially important for investors. Before you buy again, it is worth checking whether your current loans are helping or limiting your next move.
- Your loan was chosen for a different stage of life
A first-home buyer loan may not be the right fit once you become an investor. A loan selected for a single property may not suit a growing portfolio. A structure that made sense when your income was simple may not be suitable once your finances become more complex. Your finance should evolve with you.
Refinancing is not always the answer
A loan review does not automatically mean you should refinance. Sometimes refinancing makes sense. Sometimes repricing with your current lender is a better move. Sometimes the fees, valuation outcome or lending assessment make refinancing less attractive. Sometimes the right advice is to leave things alone for now.
ASIC’s Moneysmart also encourages borrowers to consider the costs of switching, including whether lender’s mortgage insurance may apply if they have less than 20% equity. That is why the review matters, because you want to understand your options before making a decision.
What happens in a home loan review
A proper review should look at where you are now and where you are trying to go.
At Strategic Brokers, that means considering things like:
- What is your current loan?
- What rate are you paying?
- What are your repayments?
- Are you using your offset properly?
- Do you have fixed or variable debt?
- What is your property worth?
- How much equity might you have?
- Has your income changed?
- Are you planning to buy again?
- Are you investing?
- Are there tax or structure considerations you need to discuss with your accountant?
- Does your current lender still suit your needs?
The goal is not to make change for the sake of it, but it is to make sure your loan still makes sense.
The risk of leaving it too long
Leaving your loan untouched can be costly. You may be paying more than you need to. You may be missing better structure. You may have usable equity sitting idle. You may be limiting your borrowing capacity. You may only discover a problem when you are already trying to buy.
The review itself does not commit you to anything, but simply gives you clarity.
A better loan is not always a loan
Sometimes the best result is staying with your current lender but changing the structure. Sometimes it is splitting the loan. Sometimes it is changing repayment settings. Sometimes it is improving offset usage. Sometimes it is refinancing to a new lender entirely.
The right answer depends on your goals.
That is why Strategic Brokers looks at the broader picture, not just the headline rate.
Is your loan still doing its job?
If it has been a while since someone properly reviewed your loan, it may be worth taking a second look. At Strategic Brokers, we help clients understand whether their current loan still fits their income, property, plans and next move.
If you have not reviewed your loan recently,
get in touch with the Strategic Brokers team today
