Now is the time to review your mortgage

A mortgage review could save you thousands in interest, allowing you to have some extra cash when you really need it. And it's not only about getting a better interest rate, it's about structuring the mortgage in the right way too.

That's where a good mortgage broker comes in. And we've got close to 1000 five star ratings.

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When it comes to your home loan, the little things really matter

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.

And if things are getting tight, you may have the option to reduce your repayments significantly without increasing the life of your loan. Yep, we're not talking small change here.

So what's stopping you getting a free mortgage review?

People often think that having a mortgage review means tons of tricky forms and ultimately changing banks. It doesn't have to be like that.

Take advantage of lower interest rates

Getting just a small amount shaved off your interest rate can make a difference to your monthly payments, leaving you more money for the things you want - not to mention getting your home loan paid off quicker.

You don't necessarily have to switch banks to get a better rate

Your Squirrel mortgage adviser can often renegotiate your mortgage with your current bank, saving you the hassle of switching if you're happy where you are.

If your lifestyle has changed, so should your mortgage

Maybe you've started a family, maybe you've retired. Whatever life stage you're at, make sure your mortgage is structured in the best possible way to suit your needs right now.

Save thousands over the life of your home loan

We're not thinking peanuts here. We're talking tens of thousands of dollars! A review costs you nothing but could save you buckets of money. Seems like a no-brainer.

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The lowdown on break fees

Sometimes when reviewing your mortgage we might find that the best solution is switching you to different bank. In this case the bank your mortgage is with will charge what's called a "Break Fee". This is because you are breaking a legal contract between you and the bank. The bank incurs a real cost as a result, which is then passed on to you. They’re not just trying to squeeze you for a bit more.

Generally speaking, the longer the remaining time on your fixed term or the bigger the difference between your current interest rate and the new rate (if switching from a higher rate to a lower rate), the higher the break fee.

So is it worth breaking my fixed term?

There are circumstances where it’s worth breaking your fixed term, but it could also end up costing you more in the long run. Every situation is different so get in touch with one of the team to help you work out what’s best for you.

Can I break out of a fixed interest loan to take advantage of falling rates?

It might be possible to break out of a fixed loan before the term is up, but you’re likely to be charged a break fee for doing so. This is because the bank is incurring a loss by you breaking the term early. This loss is passed on to you in the form of a break fee. There are some instances where it’s worth breaking your fixed term, but it could also end up costing you more in the long run. Every situation is different so get in touch with one of the team to help you work out what’s best for you.

What happens if I sell my house?

If you sell your house to buy a new one while still under a fixed term, you may be able to transfer the existing loan and rate to the new property. If you’re repaying your loan once you’ve sold, you may have to pay break fees. Before you sign anything, get in touch with one of our team to chat through your options.

How can I avoid paying break fees?

The only way to be certain you won’t have to pay break fees is to make sure you don’t break your fixed term early. So before you fix for any period of time, ask yourself if you’re planning on selling in that timeframe, and also to what extent you will feel regret if interest rates were to drop and you were stuck on a higher rate? There are ways to set up your mortgage to take advantage of the certainty of fixed terms but also retaining the flexibility of floating rates. Talk to one of our advisers to help get the perfect mortgage structure for your situation.

Should I refinance to a different bank to get a better deal?

Homeowners can often benefit from refinancing their mortgage because lenders will typically be more competitive with pricing for new business. If you're thinking about switching banks, here are 4 things to consider.

Make sure you understand all of your options

One of your options is to stay put. Your existing lender will be prepared to sharpen the pencil to keep you as a client – it is just a question of how much. What can be frustrating is that you will likely need to get an approval elsewhere before they will match it.

When it comes to refinancing it might be pricing or it could be due to another lender having a better policy or product, or if you own multiple properties it could be to diversify the risk of having all of your lending in one basket. Make sure you know all of your options. If you set out financial goals that you are working towards, this will make it easier to make decisions.

Confirm fixed rate break fees

If you have multiple loans on fixed rates, then chances are you will incur fixed-rate break fees. These can be significant and add up to several thousand dollars. Essentially, a break fee will equal the interest you save by switching your mortgage to a new, lower rate, so there is seldom a big financial benefit to refinancing. The savings from a new lower mortgage rate will offset the break fees.

Factor in legal costs

When you refinance you may need to use a conveyancing lawyer which will cost around $900. There are some free refinancing services that you can use in conjunction with Squirrel.

Make sure the financial benefits outweigh the costs

Most refinancing is price related. The benefit is a lower mortgage rate and a cash-back contribution. This needs to be netted against the costs of refinancing including break fees and legal costs. If there is a net benefit it usually relates to the cash-back.

A cash-back contribution is a cash lump sum given to you by the bank at settlement. It is a genuine cash back but can be clawed back within three years. It can be as much as 0.80% of the amount borrowed, but depends on market conditions.

A cash-back can make it opportune to refinance and lock in a new, lower mortgage rate before they go up.

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