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An important part of maintaining a mortgage is conducting regular reviews. This ensures you’re getting a competitive deal, and that your loan’s features remain neatly aligned with your financial goals.

By its very nature, the loan market evolves to meet the fluctuations of reserve bank interest rates. New lenders and loan products emerge on the market regularly. This means that a regular loan review could help you save a significant amount of interest, or give relief in some form by providing more attractive loan conditions.

But how often should these reviews take place? And do all loans need to be reviewed regularly?

If you’re like many of our clients, you’re leading a busy life. Work, family, and leisure are priorities. This means that reviewing something that seems “OK” shouldn’t have high priority. However, in this article, I’ll explore the necessity of annual home loan reviews, exploring their purpose, the components examined, and the advantages they provide. Additionally, I’ll discuss when they might not be necessary, and how to have yours reviewed with minimal fuss.

So, why should most mortgages be reviewed every year?

Reviewing your home loan regularly ensures it remains competitive in the ever-changing financial landscape. The primary purposes of home loan reviews include:

• Ensuring competitiveness: Financial markets fluctuate, and interest rates change. Regular reviews help ensure that your home loan’s interest rate remains competitive, potentially saving you money in the long run.
• Aligning with financial goals: As personal financial situations evolve, so do financial goals. A home loan review helps ensure that the terms of your loan continue to align with your current and future financial objectives.
• Identifying savings opportunities: By regularly examining your home loan, you can identify opportunities to refinance to a lower interest rate or better terms, thereby reducing monthly repayments or overall loan costs.
• Monitoring fees and charges: Over time, fees and charges associated with your home loan can change. A review helps ensure that you are not paying more than necessary and can reveal hidden or increasing costs that may be avoided.

What parts of the loan should be reviewed?

When conducting a home loan review, several key components need to be examined:

Interest Rates:

• Assess the current interest rate on your loan.
• Compare with market rates to determine competitiveness.
• Explore options for refinancing if lower rates are available.

Fees and Charges:

• Review any ongoing fees (e.g., monthly service fees, annual fees).
• Check for one-off fees (e.g., early repayment fees, exit fees).
• Identify hidden costs that may affect the overall cost of the loan.

Loan Features and Benefits:

• Evaluate the usefulness of features such as offset accounts and redraw facilities.
• Determine if new features or benefits are available that could provide greater flexibility or savings.
• Ensure current features align with your financial needs and lifestyle.

Repayment Terms:

• Assess your repayment schedule and frequency.
• Consider the benefits of changing repayment terms (e.g., switching from interest-only to principal and interest).
• Evaluate the impact of making extra repayments on your loan term and interest savings.

Loan Balance and Equity:

• Check the remaining balance on your loan.
• Calculate the equity you have built up in your property.
• Use this information to explore options for refinancing or accessing equity for other financial needs.

Lender Services:

• Review the quality and responsiveness of your lender’s customer service.
• Consider if your current lender is meeting your needs and expectations.
• Explore options with other lenders if service levels are unsatisfactory.

Is there any situation where an annual review isn’t needed?

While regular home loan reviews are generally beneficial, there are certain situations where annual reviews may not be necessary.

Usually, fixed-rate loans provide interest rate stability over a set period. Since their rate remains unchanged, the primary benefit of reviewing for rate changes is not applicable. Fixed-rate loans offer predictable repayment amounts, making financial planning easier. This stability reduces the need for frequent reviews unless the fixed period is nearing its end.

If your financial situation remains consistent with stable income and expenses, the urgency for an annual review decreases. The existing loan’s terms may continue to meet your needs effectively.

However, while these scenarios may reduce the need for annual reviews, it is still important to remain informed about the loan market and your financial situation to ensure your home loan continues to serve your best interests. That’s where we come in.

Further reading about the power of regular loan reviews

We love helping our clients review their loans. Why? Because it saves them money and makes their life so much easier. Read this article here if you want to see the life-changing power of a mortgage refinance, based on three stories of real clients of ours. And here’s how we solved three challenging lending problems for our clients.

Your next step: Request a Free 30-Minute Finance Strategy Session

If you’re looking for an expert team (and a broker with premium status) to help you refinance one of your mortgages, request a Free 30-Minute Finance Strategy Session during which you will…

• Get a realistic understanding of your current situation… and how much you might be able to save via a refinance
• Get a better understanding of the lending options available to you
• Discover ways to save money on interest, fees, and charges that are specific to your unique situation
• Get an up-to-date picture of the lending landscape including rates, conditions, and how to structure loans
• Learn about our process to find you a loan that could save you thousands.

This no-obligation free session will be held with one of our experienced mortgage brokers. Please be assured this will not be a thinly disguised sales presentation. On the contrary, you’ll receive our best strategic advice, specific to your situation, so you too can accumulate multiple properties without sacrificing your current lifestyle and accelerate your progress towards wealth.

Schedule Your FREE 30-Minute Finance Strategy Session Today.

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Please note, the numbers and assumptions listed in this article are for educational purposes only. Individuals should seek specific advice pertaining to their unique situation and the real estate market before making any decisions.

Trilogy Funding Two is a corporate credit representative (Representative Number 506131) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237)