A mortgage isn’t something you set and forget. As things in life change, so should your mortgage and reviewing it regularly could save you thousands in interest, and pay it off faster.
There’s a common misconception that to get the best deal on your mortgage you have to refinance to another bank, and spend precious time filling out tricky forms. It doesn’t necessarily have to be like that. Here are five reasons why it’s worth getting a mortgage review now.
1. Low Rates
Getting an extra 0.25% off your interest rate adds up to tens of thousands of dollars saved - especially if you keep your repayments the same, or it can free up cashflow for when you really need it.
The economy has taken a massive hit, The OCR seems to keep getting lower, and mortgage rates in the New Zealand market are the lowest they've ever been. They won’t last. Deposit rates are also at an all-time low, and can’t go much lower without causing funding issues.
The Reserve Bank has talked about increasing bank capital and that means higher mortgage rates eventually. The old saying “a bird in the hand is worth two in the bush” is sage advice. Here’s the irony, you’ll wish you locked in some low rates after they go up!
2. Credit is getting tighter
While LVR (Loan-to-value ratio) restrictions have been lifted for at least 12 months, banks continue to maintain strict lending criteria. For anyone on only interest-only payments, extending the interest-only period isn’t always guaranteed. For you to stay in control, it pays to have a plan. Everything is ok, until it’s not and then it’s too late!
3. Improve your cash flow
Sometimes there are simple things we can do to improve your cash flow. That could be a lower mortgage rate, going on interest-only payments for a time or extending the term of your loan, or consolidating other debts. Even paying off your student loan can make a big difference. I won’t even try and explain that last one but it works!
4. Pay it off faster and save heaps
Some simple changes to your mortgage and the way you manage it could take five years off your mortgage term and save you $40,000 in interest, and that’s just the beginning. We're not talking peanuts here. It’s wholly possible to pay a mortgage off in fifteen years if you’re anal. If paying off faster is your goal then let’s do that. We love a challenge.
5. Better budgeting
Money is the source of most arguments and relationship stress. Sometimes the cause is just the daft way you manage your money and that usually involves an out-of-control revolving credit. It can be an easy fix and we’re great at ‘brokering’ that deal.
You can also use our mortgage calculators to estimate what your repayments would be.
This article was originally published in March 2019, and updated in May 2020.