Top ten tips to beat the mortgage drain

1. Make extra repayments on your home loan

Making fortnightly or weekly repayments on your home loan instead of monthly can help reduce your mortgage over time. If you have the opportunity to pay a lump sum into your home loan, for example from your tax return, then we recommend you put the extra money into paying down the balance of your home loan. You will notice that the amount of interest you have to pay each month is also reduced.

2. Keep paying at your old interest rate

In the past year, we have seen interest rates drop, which will an effect on your monthly repayment amount. However, many financial experts advise home owners to maintain their existing home loan payments (whenever a rate drop occurs) in order to save thousands of dollars in the long run.

3. Get the right home loan for you: refinance your loan if necessary

Is your home loan full of hidden fees and features you don't use? Do you know whether your current home loan is still suitable for you? We recommend that you speak to a qualified mortgage broker today about a home loan review. Your mortgage broker will recommend whether your current home loan is still the best option for you based on your needs and current circumstances.

4. Cut back on personal spending

Cutting back even just a little on your personal spending can help to make paying your home loan easier. Some simple ways to save extra money include bringing your lunch to work or cutting down on the number of coffees you have everyday. For example, if you bring lunch to work everyday instead of eating out, you could potentially save $2,600 a year!

Consider going to the local library, go camping or travel locally instead of heading overseas. The extra money you save can then be put towards paying down your home loan.

5. Consider switching to a fixed rate loan

If you are on a tight budget and you want to know the exact amount you'll be paying each month, then you should consider fixing part of or all of your home loan. Before you get a fixed rate home loan, make sure to seek professional financial advice first. Your mortgage broker will be able to advise whether a fixed rate loan or a split home loan is the best option for you based on your needs and current circumstances.

6. Renegotiate your interest rate

The home loan market is constantly changing so if you've had your loan for a number of years, it may be possible to try to renegotiate your current interest rate. Talk to your mortgage lender and see what they can offer. Alternatively, you can speak to a mortgage broker about refinancing your home loan.

7. Ask your mortgage lender for help

If you've lost your job or you're taking time out to look after your baby, ask your mortgage lender about taking a "pause" from your home laon repayments. Lots of mortgage loans offer this facility but beware it could extend the life of your home loan or increase your home loan amount (the deferred interest will be added to the mortgage loan balance). It may only be for a short period of time, usually for 3 - 6 months.

You can also reduce your home loan repayment amount if you are struggling, by:
• extending your home loan term
• changing to interest only repayments
• re-negotiating your interest rate with your mortgage lender

Speak to your mortgage lender for more information on the above options. Most lenders also have hardship provisions for their customers in trouble so we recommend you seek help before it's too late.

8. Be prepared

If you're planning on starting a family or undertaking a major renovation on your property, then be sure to plan ahead. For example, loss of income or any extra expenses as this may impact on your mortgage commitments.

Make your mortgage work for you. For example, consider getting an offset account which is linked to your home loan. Your salary can be paid into the offset account. When you use a credit card for all your monthly expenses, you can move the money out of your mortgage and onto the credit card when your monthly bill is due. This will allow any money sitting in your offset account to reduce the amount of interest paid at the end of the month on your home loan.

9. Be disciplined

Think before you spend. Do you really need that new handbag? Put the money towards your home loan repayments instead.

10. Get appropriate insurance

If you are worried about the current economic climate and your job security, then we recommend that you consider taking out income protection or life insurance. These types of insurance policies will protect you and your family in case you lose your job or are unable to work due to illness or serious injury.

For more information about reducing your home loan or if you need a home loan review, speak to one of the mortgage brokers at Intellichoice today on 1300 55 10 45.

What is a loan repayment calculator

Please note that the results from the loan repayment calculator is an estimate only and results will vary depending on the variables you enter. For example, the interest rate, may change depending on the mortgage lender you are using and the total loan amount borrowed. A loan repayment calculator should only be used as a guide. Your mortgage broker will be able to provide you with more information on your loan repayments once they have a better understanding of your needs and circumstances.

Nonetheless, a loan repayment calculator can be an effective tool because it can help you understand how a home loan works, how much interest you may have to pay, the home loan term and how that will affect your weekly or monthly home loan repayments.

A loan repayment calculator is a great tool for you to use to compare different loans that are currently available.

Remember that before you take out any home loan, please read the full terms and conditions. If you need help with a home loan or have any questions about your loan repayments, speak to one of the mortgage brokers at Intellichoice today on 1300 55 10 45. A qualified mortgage broker will be available to answer any questions you may have and assist you in finding a home loan that suits your needs. Our mortgage brokers have access to a huge range of home loan products, including fixed rate home loans, standard variable home loans, non conforming home loan, low doc home loan or bad credit home loan.

Mortgage refinancing your home loan

Mortgage refinancing utilises the existing equity available in your property to repay other high interest debts. It may allow you to package your current monthly repayments from all of your debts into one convenient repayment. This also means that you end up paying less each month than what you currently would be paying.

Before you refinance your home loan, please speak with one of the mortgage brokers at Intellichoice first. Everyone's personal financial situation is unique and we recommend that you seek professional financial advice first. Our mortgage brokers will need to assess your situation first, so we can provide you with a financial product that suits your needs and current circumstances.

How does a home loan refinance work?

Home loan refinancing is the process of applying for a new home loan on your current property and using this new home loan to pay out your current mortgage and any other debts you may have.

Benefits of refinancing your home loan

The benefits of a home loan refinance include:

• paying off your home loan faster
• extending the length of your home loan and thereby reducing the amount you repay each month.
• a lower interest rate or more favourable home loan terms than your current home loan
• ability to consolidate debt, for example, your credit cards and personal loans into your home loan to take advantage of the lower interest rate
• drawing additional funds against your property for expenses of a personal nature

Consolidate debt through a home loan refinance

Home loan refinancing is often used to consolidate credit card and personal loan debt. This is because the interest rate on a home loan is usually available at a substantially lower interest rate than the interest rate you pay on your credit cards or personal loans.

By consolidating all your debts under your home loan, you will only have to make a single payment instead of making multiple payments each month. In addition, you may end up paying less each month than you are currently paying and this will help you to manage your finances more effectively.

Applying for a home loan refinance

When applying for a home loan refinance, make sure:

• You are fully informed and understand the terms and conditions, features and benefits, repayment amount, home loan terms, additional fees etc
• Your repayments have been reduced - not increased
• There are no hidden fees or costs
• You have achieved control over all your debts
• There is a real long term benefit to you

If you have any questions, or if you are unsure if home loan refinancing is right for you, please speak to the mortgage brokers at Intellichoice first on 1300 55 10 45 and we will work out with you what product best suits your financial circumstances.

How will interest rates affect your home loan repayments

Below are some steps you can take to reduce the effects of rising interest rates:

1. Consider fixing part, or all, of your home loan

If you have a tight budget and want to know exactly what your repayments will be in 2 years time, fixing your home loan can allow you to lock in a rate which will not go up and down with variable interest rates. However, you do have to consider losing some flexibility in your arrangement.

2. Increase your home loan term from 20 or 25 years out to a 30 year term

By increasing the term of your home loan from 25 to 30 years, you could reduce your monthly home loan repayment considerably. Based on a $250,000 home loan at 7.07%, increasing your home loan term to 30 years will reduce your repayments by $103 per month.

3. Don't be fooled by Honeymoon Rates

Some mortgage lenders advertise very low honeymoon rates to home buyers in an attempt to lure more clients. Often these products default to a higher-than-standard variable rate after the honeymoon period has expired, usually after 1 year. If you do take a honeymoon or introductory rate for the first 12 months, make sure you know what your home loan repayments will after the honeymoon period expires consider even making these payments through the initial 12 month honeymoon period. This will enable you to get 'ahead' in your repayments along with avoiding the shock of the honeymoon rate finishing.

4. Consolidate your debts

As the cost of money rises across the board, personal loans and credit card interest rates often rise with home loan interest rates. Consider rolling your multiple debts into your property home loan. This could save you having to pay a much higher rate of interest and in most cases can save you about 10%.

For more details and assistance with your home loan, or for a home loan review, contact one of our mortgage brokers at Intellichoice on 1300 55 10 45 for an obligation free health check of your finances and home loan.