End of financial year review: Does your home loan measure up?
Some borrowers have already kicked off their reviews, with the latest Mortgage Choice Home Loan Report revealing the value of refinance loans was up 30 per cent year-on-year over the March quarter.
So, is it worth finding out if your home or investment loan is still giving you the best bang for your buck?
The short answer is of course yes. Your reasons for reviewing your loan will be different to your neighbours', but it's worth taking time to review your loan to ensure it's working for you. Reach out to a mortgage broker who can compare your loan against what's in the market to see if you can access a sharper rate, an improved loan structure, or help you understand if you can tap into your equity.
This end of financial year, ask yourself these four questions.
Can I access a better rate?
The Reserve Bank of Australia has already delivered two rate cuts this year, and the market is predicting a third cut on 8 July. As we see more cuts to the cash rate, competition will ramp up as some lenders pass on the savings in full, and others don't.
Some lenders are offering great rates to attract new customers, so if your home loan rate doesn't start with a 5, you might be paying too much.
Can I claim tax deductions?
If you have a mortgage on an investment property, now is the perfect time to take stock of the interest you paid, as well as any expenses related to property maintenance or management as you may be able to claim tax deductions relating to these expenses on your next return.
Will a better loan structure offer me any benefits?
Refinancing could help you access different loan features or a structure that better suits your needs, such as an offset account or redraw facility.
Am I rolling off a fixed rate?
If your fixed-rate term is coming to an end soon, it's the right time to shop around. When your fixed term ends, your lender will automatically move you onto a standard variable rate loan, but it may not be the most competitive on offer.
Can I access equity?
Property values continue to rise, with national values up 4.12 per cent year-on-year according to the May PropTrack Home Price Index. If your property has increased in value while you've had your home loan, you may have equity built up that could help you negotiate a lower rate or even put you in a position to upgrade your home or purchase another property.
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