Home Loans: The Right Questions to Ask

We’re always looking for way to save money, but one place where people forget to look also happens to be their biggest household expense: their mortgage. And I believe the reason why people don’t look closer at their home loan is because the idea of refinancing seems too difficult, too confusing, or is perceived as probably not worth it for the effort. If you’re one of those people, it’s time for you to speak to a mortgage broker and ask yourself some questions.

What’s my rate?

In my experience, many people know what their monthly payments are, but they don’t actually know their interest rate, let alone what it all means. Do you? Take a look – if it starts with a “5”, it’s time to shop around because I know you can definitely do better and at Yellow Brick Road Ballart we’ve got the experience and resources to help you get there.

What does the market say?

Use a comparison site and find out what’s on offer. The current market for variable rate mortgages runs from high 3% to over 6%. Three-year fixed rate mortgages range from the low fours to well over 6%. There’s a lot of difference, which means there’s solid scope for savings There’s a lot of difference, which means there’s solid scope for savings.

What could I save?

Use the comparison sites to calculate several results. If you have a $350,000, 30-year loan with an interest rate of 5.24%, and you refinanced to a rate of 4.74%, you would save $107 a month and $38,480 over the life of the loan.

What must I have?

Have a good repayment record with your current lender and ensure you are not currently in arrears. Also, know that if you’re half-way through a fixed-rate loan you may be charged a break fee to leave. Make sure it’s worth it. Our mortgage brokers can help you interpret your credit history or weigh up the pros and cons of breaking your fixed-rate loan.

What are my other costs?

A new lender will likely charge upfront fees, and there may be some costs to exit your mortgage. Also, if you have less than 20% equity in your new loan, you’ll pay lenders mortgage insurance, which increases your costs.

Who do I see?

Go to a mortgage broker directly, and if you can’t make it to see us in person, then give our Ballarat branch a call. Mortgage brokers are refinancing experts who know how to streamline the process. But remember, it’s always best to approach a mortgage broker as they have access to more rates and option when it comes to your home loan.

How long will it take? What do I have to do?

Our mortgage brokers and loans managers will give you a run-down of the process, the application, the documents they want you to provide, and the time it typically takes.

Is it worth it?

You must answer this yourself. The total interest paid on a $300,000, 30-year mortgage at 5.6% is around $66,000 more than the same mortgage at 4.6%. You have to decide it this is worth the effort of refinancing.

If you still have any questions or concerns regarding your home loan, feel free to give one of our mortgage brokers a call or come by our branch in Ballarat.