Reviewing Your Mortgage: Why It’s Essential and How to Do It Right

As a mortgage broker, I regularly advise clients on the importance of reviewing their mortgage. A mortgage isn’t something you should simply set and forget—market conditions change, personal financial circumstances evolve, and better deals often become available. By conducting regular mortgage reviews, you can ensure you’re not overpaying and that your loan still suits your needs. In this article, I’ll explain why mortgage reviews are crucial, when you should consider reviewing your mortgage, and how to go about it.

Why You Should Review Your Mortgage

Many homeowners take out a mortgage and stick with the same lender and rate for years without questioning whether they could get a better deal. Here’s why reviewing your mortgage is essential:

1. Interest Rate Changes – Mortgage rates fluctuate based on market conditions. If you took out your mortgage years ago, you might find that current rates are lower, which could mean significant savings.
2. Better Loan Features – Over time, new mortgage products emerge with features that may better suit your needs, such as offset accounts, redraw facilities, or flexible repayment options.
3. Change in Financial Situation – Your income, expenses, and financial goals may have changed since you first took out your mortgage. A review ensures your loan aligns with your current financial position.
4. Avoiding the Loyalty Tax – Many lenders offer better deals to new customers while existing borrowers pay higher rates. A mortgage review can help you negotiate better terms or switch to a more competitive lender.
5. Debt Consolidation Opportunities – If you have multiple debts with high-interest rates, refinancing your mortgage could allow you to consolidate your debts and lower your overall repayments.

When to Review Your Mortgage

While it’s good practice to review your mortgage regularly, certain situations make it even more important to do so:

• At the End of a Fixed-Term Period – If your fixed-rate mortgage is about to expire, you may be placed on a higher variable rate. This is an ideal time to shop around for a better deal.
• When Interest Rates Drop – If the Reserve Bank lowers interest rates, it might be an opportunity to refinance to a lower rate and reduce your repayments.
• If Your Financial Situation Changes – A salary increase, decrease, job change, or major life event (such as marriage, divorce, or having children) can impact your mortgage needs.
• Every Two to Three Years – Even if nothing drastic has changed, it’s a good habit to review your mortgage every couple of years to ensure you’re still getting the best deal.

How to Review Your Mortgage Effectively

Conducting a mortgage review doesn’t have to be complicated. Here’s a step-by-step approach:

1. Check Your Current Mortgage Details – Look at your loan balance, interest rate, fees, and repayment terms. Understand what you’re currently paying.
2. Compare Interest Rates and Loan Features – Research market rates and see how your current rate compares. Also, consider additional features like offset accounts or flexible repayment options that might be beneficial.
3. Contact Your Lender – Speak to your bank or lender and ask if they can offer you a better rate. Many lenders will reduce your rate if you threaten to switch to a competitor.
4. Speak to a Mortgage Broker – A broker has access to multiple lenders and can help you find the most competitive deal suited to your circumstances.
5. Calculate the Costs of Switching – If you’re considering refinancing, factor in costs like exit fees, application fees, and legal fees to determine if it’s financially beneficial.
6. Make an Informed Decision – If a better deal is available and the savings outweigh the costs, proceed with refinancing. Otherwise, renegotiating with your current lender might still help you secure a better rate.

Final Thoughts

Regularly reviewing your mortgage ensures you’re always getting the best possible deal. Whether it’s securing a lower interest rate, accessing better features, or adjusting to changes in your financial situation, a mortgage review can save you thousands of dollars in the long run. If you’re unsure where to start, working with a mortgage broker can make the process easier and more efficient.

Don’t let an outdated mortgage hold you back—take control of your finances by reviewing your mortgage today!

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