Health Checks For Home Loans
The Age
Wednesday February 26, 2003
Have you taken your home loan in for a health check-up lately? A borrower's circumstances and needs will change dramatically over the life of their home loan, so it is important they regularly check their mortgage still suits their situation.
General manager of mortgage wealth at the Commonwealth Bank Lyndell Fraser says borrowers should see their bank for a home loan check every six months.
Health checks can resolve service problems; deal with changes to personal circumstances such as illness or pregnancy; identify whether the customer is utilising the features of their loan; determine future borrowing needs; or reveal the need to make changes to repayments or even the loan type.
"A borrower may have taken a low-frills, basic variable rate without getting access
to repayment redraw and now they are renovating and finding getting access to their special repayments is difficult and costs more than with a standard variable home loan rate," Mr Fraser says.
Home loan health checks frequently reveal borrowers are not getting the most out of their loan because they are unaware of or not making use of the features available to them, such as repayment redraw, repayment holidays, the capability to fix loans or do split rate, or the option to change to a line of credit or to a base variable rate loan.
Mortgage Choice suggests borrowers
ask themselves the following questions to determine whether it is time for a home
loan check-up:
• Would you like to own your home sooner rather than later?
• Are you dissatisfied with your current lender?
• Has it been more than two years since you established your mortgage?
• Would you like to increase your home's value through renovation?
• Would you like to consolidate all your debts into one easy loan?
"You don't want to turn your home loan into your hobby," Mortgage Choice
franchise owner James Glenwright says. "But at the same time, I think every
couple of years or if there's a major change in your personal financial
circumstances - whether that's change of income, change of expenses or you want
to do something major - or if there's a major change in the economic
environment, that's a trigger for having a review of your home loan."
Top 100% offset home loans**
Banks
Lender Product True rate Lender
Total Ongoing Exit
name AAPR* rate upfront fees
fees fee
BankWest VIC/QLD Gold 1-yr Intro Home Loan 6.07% 5.57% $600
$8/month $100
ANZ Bank Easy Start 6.39% 5.25% $600
Nil $90
St George Bank Introductory Fixed 1-yr 6.41% 5.25% $654
$5/month $272
Colonial 1-yr Guaranteed Rate H/Ln 6.42% 5.25%
$600 $8/month $150
Commonwealth Bank 1-yr Guaranteed Rate 6.42% 5.25% $600
$8/month $150
Non-banks
Lender Product True rate Lender
Total Ongoing Exit
name AAPR* rate upfront fees
fees fee
Heritage B Society Value Plus 1-yr Disc Var 6.19% 5.29%
$647.50 $5/month $150
Easy Street Fin Services EasyHome Equity 6.30% 6.05%
$828 $500/year $100
Advantage Australian CU Introductory Fixed 1-yr 6.34% 5.29%
$800 Nil N/A
The Rock Building Soc Amortising Equity Var 6.45% 6.40% $407
$5/month $155
Maroondah Credit Union Standard Variable 6.59% 6.55% $608
Nil $60
*AAPR is the annualised percentage rate - the rate after extra fees and charges
are taken into account.
**Rates are for loans of $176,000-275,000 in Victoria for owner-occupied homes.
Compiled by www.interestrate.com.au using Cannex data (February 19).
© 2003 The Age