Home loan check

Have you reviewed your home loan lately? With new home loan products coming on to the market all the time, as well as changes in market conditions, it's a good idea to review your home loan periodically to make sure you're in the best home loan for your circumstances, and that you're getting all of the features and benefits that you need.

Choosing or reviewing your home loan

When deciding on the home loan that best suits your needs, you may want to ask yourself the following questions:

• Do I want to pay the loan off as quickly as possible or am I content to pay out the loan over its full term?
• Can I stick to a budget or am I a bit undisciplined with my spending?
• Do I want to keep my loan repayments the same, rain or shine, or am I happy for them to change when interest rates change?
• Am I likely to want to draw back some of my advanced repayments in the future for spending on holidays, cars, renovations etc?
• Am I planning on having children or taking extended leave from employment?
• How secure is my current job?
• If I have children, do I account for their school fees, sporting and entertainment costs in my budget?
• Am I likely to receive lump sum cash payment such as an inheritance or bonus at any stage?

Make an appointment for your free home loan health check.

In addition to the above questions, here are some additional Frequently Asked Questions that can help you assess whether you're getting all of the best possible features and benefits in your home loan.

Does my lender offer a 100% offset account on variable and fixed rate home loans?

A 100% offset account is a savings account that is linked to a nominated home loan account to reduce the amount of interest you pay of the loan. It effectively works by deducting the amount of money in the offset account form the home loan when calculating how much interest needs to be paid. With this type of account, no interest is paid to the offset account but instead the offset will pay the same rate of interest on the daily balance held in the offset account as is charged against the loan account. This results in less interest being charged to your loan. Partial offset accounts only offer a portion of the savings advantage, as opposed to a full 100% offset account.

The other advantage to an offset account is that when you earn interest on a savings account, the savings interest is taxable, but because your offset account balance is used instead to reduce your home loan monthly interest charge, no tax is payable. The offset account also functions like a normal savings account, with the money being accessible through ATM and EFTPOS terminals. At Queensland Country, we offer the 100% Offset Account for all fixed and most variable owner-occupied home loans.

Can I make additional repayments without penalty?

Additional repayments are simply payments that you make which are on top of the standard contracted repayment for your loan. If you make more than the required contracted repayment, then the home loan balance your interest is calculated on will decrease. Effectively, this means your loan will cost less in the long term. This feature is extremely useful, particularly if you expect to be earning extra income during the course of your home loan. It will assist you with paying off your loan sooner and could save you thousands of dollars in interest over the life of your loan. You should check to see whether extra repayments are allowed without any extra fees or charges being incurred. Fixed Rate Home Loans usually have restrictions on the additional payments you can make in addition to your regular repayments before penalty fees apply (commonly known as Early Repayment Fees). Be sure to speak with your lender prior to making any additional repayments to your fixed home loan.

Are my repayment occurrences flexible?

Home loan interest charges usually occur on a monthly basis and hence loan repayments will be set up to occur monthly. Some lenders allow you to make your payments fortnightly or weekly; this payment option will save you a substantial amount of interest in the long run. Interest on a home loan is calculated daily, so the more often you pay off a little of the principal, the less interest you’ll pay over the long term. At Queensland Country we allow you the choice to make your repayments weekly, fortnightly or monthly.

Does my home loan provide a redraw facility?

When you make extra repayments on your home loan, you may wish to access those extra repayments for purposes such as holidays, new furniture or a new car. A redraw facility allows you to make extra payments on your home loan and then access the money again when you need it. By paying off extra amounts of the loan, you save money by paying less interest. With a redraw facility in place you then have the security of knowing you can access that money should the need arise. Most lenders have a minimum redraw amount and also charge a fee per redraw so consider the cost of the fees associated with redraw when choosing your loan provider.

Can I get my salary paid directly into my home loan?

This option allows your salary or wages to be paid directly into your home loan account. This is an advantage if you are not a disciplined saver and can act as a great budgeting tool. Also, if you are paid weekly or fortnightly, these direct credits will also help you pay off your loan sooner by saving you interest in the long run.

Can I apply for a repayment holiday?

This option can be particularly important during career changes, breaks such as maternity leave or for those unexpected circumstances that occur in your life. Some lenders will allow a complete holiday from repayments or a period of reduced repayments during these times in your life. There are typically certain conditions that have to be met before a repayment holiday can be granted.

Can I switch to a fixed rate?

This option allows the borrower to switch from a variable to a fixed rate home loan. This type of request usually has a switching fee and it is recommended that you speak to your lender prior to switching your loan to ensure you are aware of all the necessary considerations. Fixed Rate home loans usually have some restrictions that you need to be aware of prior to making the switch.

Can I choose interest only payments?

Interest only payments means you are only required to pay back the interest accrued on your home loan. This option does not pay back any of the principal (the amount you borrowed). At the end of the interest only period, you are then expected to start paying back the principal. This option is not designed to save you money because you will not reduce the principal loan amount. People usually take advantage of this feature when they require reduced repayments for a period of time or for investment purposes. Investors usually choose this option as an investment strategy- usually to negative gear an investment property or if they are planning on buying and selling an investment property in a short time frame with the intention of making a capital gain. With these types of strategies it is always recommended that you seek independent financial advice before making any of these decisions. Another important point to remember is that you will still need to pay off the original amount you borrowed by the end of the loan term.

If you'd like to have a chat to our lending experts and get a full health check on your home loan, contact your nearest branch, complete our online form below or give us a call on 1300 765 195.

Make an appointment for your free home loan health check.

Information provided on this page is presented as general information only and does not take into consideration your personal needs or financial situation. Where reference to legal or other compliance information such as: Financial Services Guide, Product Disclosure Statements, Terms and Conditions of Use and Fees and Charges, you should take this information into consideration along with your own personal and financial situation before making any purchasing decision.