5 Reasons Why You Should Review Your Mortgage Today

For many Australians, a home is one of the biggest investment decisions of their lives. With numerous bank and non-bank home loan options available, navigating the most cost-effective way to reduce mortgage repayments can feel complex.

In many cases, loan products accessed years ago may now be obsolete, replaced by new and often more competitive options. Alternatively, personal circumstances may have simply changed.

A review of a mortgage can determine whether a current loan remains competitive compared to existing market offers. This is an important step, as switching to another product or lender may help reduce monthly home loan repayments.

Taking time to evaluate a home loan regularly can highlight savings or features that were previously overlooked.

1. Getting a lower interest rate

It may be possible to reduce an interest rate by reviewing a mortgage regularly and switching to a lower rate, or by negotiating with a current lender. Staying informed creates opportunities to take advantage of competitive interest rates. For those without a fixed-rate mortgage, switching between lenders is generally more straightforward.

2. Debt consolidation

The need to consolidate debts can arise over time. Refinancing allows homeowners to borrow against their property at a lower interest rate than short-term debts like personal loans, car loans, and credit cards. Accessing property equity can help pay off higher-interest debts. While this may increase the mortgage balance, it can substantially reduce overall monthly commitments.

3. Improvement in your circumstances

When personal circumstances improve or a credit score increases, more lenders may consider an application. Being in a stronger financial position opens access to a wider range of products, increasing the likelihood of finding a competitive option compared to when circumstances were less favourable.

4. Unexpected life changes

When facing or anticipating major domestic or professional changes, reviewing a mortgage well in advance is beneficial. Changes might include starting a family, a slowdown in an industry, or transitioning away from working away from home.

Such shifts can affect financial stability and loan eligibility. Once changes occur, lender approval criteria may become more restrictive. If changes are confirmed, lenders must be notified, which can significantly affect a borrowing application.

Planning a year or two ahead helps minimise impact. For instance, anticipating a family in the future has far less impact on a current application than expecting twins in six months. If redundancies are occurring at work, reviewing finances early provides an opportunity to make adjustments or consolidate debts in advance.

5. Introductory rates come to an end

Initial home loans often feature a two- or three-year introductory rate. While these offer lower rates early on, the introductory period eventually ends. When it does, the loan typically reverts to a higher variable rate. Reviewing a mortgage a month or two before an introductory rate expires helps avoid switching automatically to a higher rate.

Spending time once a year to review a mortgage provides an opportunity to assess financial options. It does not require changing lenders every 12 months, but it allows for forward planning and ensures loan terms remain suitable.