Are You Paying More Than You Should When It Comes To Your Home Loan?
Taking out a home loan is one of the major steps most Australians will take when it comes to securing their home. However, using a set and forget approach to your home loan can end up costing you in many ways. It is vital to choose a home loan that will bring you one step closer to owning your home without accumulating debt that can leave bad marks on your credit report. These are the signs that you are forking out more than you should on your home loan.
The rate is draining your finances
When buying your first home, there are some mistakes that could be avoided entirely if you put in the research and compare your finance options. There is a reason why financial advisors always stress that you should compare and calculate your mortgage interest rate to find something that is suitable for you and won’t strain your finances.
When it comes to managing your mortgage Savvy CEO Bill Tsouvalas advises that “Every 24 months homeowners should complete a home loan health check with their trusted advisor.” If you find that the rate set on your home loan is making it a tight squeeze to meet your monthly repayments, you could consider refinancing your home loan to a lower rate.
Your mortgage is costing you more than 30% of your income
When taking out a mortgage, it is vital that you check if you will be able to meet the repayments for the entire term of the loan by calculating and comparing. Doing so can either help you find ways to shave off the years on a 30-year loan or drag it out to the point where you will need to refinance it, which can cost you more.
It is important that the finances that you use to take care of your house expenses such as the mortgage, tax, and insurance do not exceed more than 30% of your monthly income. If it does, you could find yourself draining your finances. If your house expenses exceed the 30% limit, then it is time you considered moving into a house that is more affordable.
The drawbacks of being loyal can cost you
It could be fear or sometimes laziness that has resulted in Australians passing up a good deal on their home loan. The Reserve Bank of Australia found that the average Australian is paying at least half a percentage point more than they should.
Staying loyal to your lender can prove to be costly and can also result in missing out on great deals.
Mortgage stress is a real thing that is caused by buckling under the financial demand of a home loan that needs paying off. If you feel that there is a better deal for you out there, which there probably is, it is important that you compare your options. Refinancing your home loan can be a good way to cut down the years on your mortgage and also help you save in the process.