As finance specialists, we generally find that your bank relies on you being lazy and taking advantage of you.
We have come to realise most people’s financial circumstances typically change every 2-3 years, yet we don’t take the time to review, reflect or consider what opportunities might now be available.
We find we can achieve the best outcomes for our clients by reviewing the following:
1. Current interest rate, fees and charges – things change
Generally……. this is where banks make the most money. If you don’t take the time to compare, how can you source a lower interest rate, lower fees or additional features for no cost?
Loan features may include an offset account, redraw facility, fixed interest rates (and still being able to make increased repayments).
Most banks might also include additional benefits such as having annual credit card fees waived, discount home and contents insurance or potential cash-back offers.
It can’t hurt to have a look and make sure your loan matches your current financial position.
2. Equity mate…. new valuations , new opportunities
Creating equity in your property or property portfolio provides great opportunity. If your property has increased in value since your original purchase, a loan was taken out and you have maintained the minimum repayments, it’s likely you now have an additional asset.
One of the greatest benefits in using a mortgage broker is we know which banks use which type of valuation process i.e. which bank will provide open up opportunities to you instead of just using the same bank.
Banks generally use either a desktop valuation or engage an independent Property Valuer to complete a drive-by or full property valuation. The bank’s decisions can be led by the exposure or default rate in a particular area or the lending amount.
Knowledge and experience cannot be bought. We believe we can provide great strategic value by knowing who your preferred lending partner and highest valuation will be achieved with.
3. Investment property – can you afford it?
The questions you should ask yourself, are we making this choice as a) it’s one of our goals or b) just doing what everyone else seems to want do?
You should question affordability, timing and ensure you have a plan B if something goes wrong.
Assets should be used to produce income, however, just make sure it aligns to your purpose, not following the Joneses.
4. What have you got exposed?
It’s worth reviewing your lending to see if your home is exposed due to having your investment property portfolio exposing the family home.
In the event you secured credit using your family home to buy an investment property, this is called cross-collateralising. In the event of a loan default or a significant property downturn, you may have an issue with sufficient equity in one or both properties.
We generally recommend individual, stand-alone loans provided by different banks for each property to avoid exposing your family home.
5. Interest rate vs. repayment amount
Reviewing your cash flow commitment should include the repayment timeframe. Generally, it’s worth considering three factors to your loan repayments:
interest rates,
repayment amount, and
loan term.
In the event you have a short timeframe, refinancing to a longer timeframe may reduce your cashflow commitment, which then could be used elsewhere, perhaps to repay your mortgage faster or acquiring another investment asset.
Our guarantee
If we cannot beat your current deal, we will donate $100 to the charity of your choice.
All signs lead to a protracted period of low interest rates which should lead to increased competition. Take advantage now and book a complimentary Home Loan Health Check with Fortuity Lending. Book here or call to make an enquiry.