You have probably seen the flyers and offers promoting a home loan health check, and perhaps wondered what it actually is and if it has any relevance for you.
Elkins Finance is a MFAA Approved Credit Adviser and available to talk you through a home loan health check if you are interested after reading this article, or know someone who would benefit. Call 1300 355 467 or use the contact us form to request we contact you.
The case study below describes the process and the outcome for one couple.
A simple home loan health check led this couple to refinance for a saving of $7600 a year in interest.
When Ben Dixon and Sara Peters were looking for a home loan, they thought the choice was obvious. They secured finance through the same community-owned bank most of their colleagues used, bought a house and were happily paying it off.
People do often think that by choosing a different funder to the major banks that they have already taken the step out of the square and will automatically be in front.
A few years on, they decided to follow up on a flyer suggesting a home loan health check. Ben and Sara visited their local MFAA Approved Credit Adviser.
“Being members of a mutual bank they thought they were being looked after and thought they were on quite a good deal,” their credit adviser recalls.
This wasn’t the case though. Although they had always received good service from the lender they had been with for nine years, they were on an unnecessarily high rate that was costing them both money and years on their loan.
“We were able to reduce their rate significantly, and we ended up saving them $7600 a year in interest. And the loan was only $450,000” says their credit adviser. Bigger savings would be had for larger loans.
The couple had two options: they could either reduce their repayments and have an extra $7600 each year to play with or to save, or they could keep their repayments at the current level and pay down their loan more quickly.
“They had a family as well, so the money could certainly be used elsewhere, but the aim for them was to pay their loan off as soon as possible, so they continued to make the same repayments, and have been able to reduce their loan faster,” their adviser explains.
Being able to reduce the debt significantly sooner than they originally planned means that the couple is now working towards purchasing an investment property.
“The plan is to reduce their debt first, and then be able to put funds aside for an investment purchase. They are absolutely on track to achieve that,” says Ben and Sara’s adviser.
“They are a fairly typical family, and they thought they were on a reasonable deal. It wasn’t until they came to me for a home loan health check that we were able to show them that there were significant savings to be had by looking at an alternate lender.”
In a home loan health check the following questions will be answered:
- Am I paying an unreasonably high interest rate?
- Am I paying high fees?
- Am I happy with the service I receive?
- Does my loan give me the features I need?
- Am I paying for features I don’t use?
- Have my financial circumstances changed?
- Have my goals changed?
Elkins Finance is a MFAA Approved Credit Adviser and available to talk to you about for the best deal to suit your needs for car, business or home finance. We are based in Melbourne, with offices in Blackburn and Campbellfield, but fully mobile and flexible to suit you. Call 1300 355 467 or use the contact us form to request we contact you and find out if you are paying too much.