Whether you’ve had your loan for one year or 20, you may benefit from a bit of home loan spring cleaning.

1. Reduce your home loan repayment rates  

Perhaps the best reason to take a closer look at your current loan is the possibility of paying it off faster. Even a slight reduction on your home loan rate could mean hundreds or even thousands saved on interest each year.

When you conduct your loan check up, keep a close eye on the following to help guide your debt-busting decision to refinance:

• Could you be paying a lower interest rate?
• Does another loan offer have better features for me?
• Are you paying for features you don’t use?

Answering these questions can help direct your attention to a home loan that may be better suited to your situation.

If you’re able to secure a lower interest rate, you might want to keep your repayments at their current amount despite the reduction. This way, you’ll see your principal debt amount reduce at a much quicker rate.

What works for you may be very different to another home owner. To make sure you’re getting the best deal for you, it pays to talk to the experts. At Suncorp Bank, our home loan experts can help find you the best loan to suit your needs.

Talk to a home loan expert

2. Make your money work for you

Have you recently come into a significant sum of money? Or, have you had a pay rise since you first secured your loan? Changes in income or savings are good opportunities to check in on your current home loan and see if there’s room for negotiation or refinancing.

If your higher pay grade means you have extra funds to put into your mortgage, you should speak to your lender about making additional payments. While some financial products may place limits on repayments, it’s worth discussing this in detail with them to work out the specifics that suit your particular needs. It’s also worth confirming if you’re on the right loan to make extra repayments. Many variable loans will allow you to make as many repayments as you like, as opposed to fixed loans which may include some restrictions.

Similarly, if you have no short-term plans for a large lump sum of the extra money, you can look into improving your overall loan situation with an offset account. An offset acts like a regular transaction account, except any funds kept in there count against your home loan total. Using an offset account to your advantage could help reduce your overall loan payments significantly throughout the year. Alternatively, if you’re on a variable rate, you may also want to put any unexpected cash directly on the loan to reduce the principal and any future repayments.

3. Be prepared for the unexpected

Financial difficulty can happen to anyone at anytime. If you’re under pressure, or you feel that your financial situation may change soon, it may be useful to consider alternatives to your current loan.

Before you can take steps to move from one lender to another, take a hard look at your current loan and new budget to better understand what needs adjusting. It can also be a good idea to understand your Loan to Value Ratio (LVR) before you approach your lender or another to negotiate.

Your LVR measures the amount of the loan compared to the value of your property. Say your property is worth $500,000 and you have already paid $150,000 aginst it, your initial LVR would be 70 percent: (350,000 / 500,000 = 70 percent). Knowing this information may put you in a stronger position to negotiate the terms of your new loan, particularly if you have a history of being a good saver.

4. Open up investment property options

Checking in on your home loan health could also open up a wealth of extra investment opportunities.

Many owners use the equity they’ve built in their existing home to purchase an investment property. While buying an investment property can be a good move for your financial future, everyone’s case will be different. Some investors find it easier than others to balance the responsibility of paying their mortgage and managing the extra costs of an investment property.

This is where refinancing can come in handy. Refinancing with your existing or new lender could allow you to access the equity you’ve built up in your property to purchase an investment and pay for any associated costs (think stamp duty and renovations).

Using your existing property equity to purchase an investment does come with its fair share of risks, from shifts in the property market to potentially difficult tenants. Don’t forget to talk over your investment plans with a professional before you make the leap.

5. Consolidate debts 

Reassessing your home loan could also present an opportunity to consolidate other debts.

If you have other loans – such as car loans or credit cards – refinancing could be a good way to group all your debts together into one place. In most cases, your home loan interest rate will be much lower than your credit card rate. However, consolidating debt isn’t for everyone. If your credit card debt is rolled into your home loan, you may have to face paying it off over the life of your home loan, which could span decades and end up costing you more.

Explore your home loan options 

At Suncorp, we know that everyone’s home loan needs are different. That’s why we offer three home loan plans with different benefits, from lower fixed rates to flexible repayment options.

Talk to a home lending expert

Published 10 September 2022