Take control of your mortgage

For most Australians the largest financial commitment ever undertaken is their home mortgage. The prime objective of many is to pay it off as soon as possible, particularly as the interest is not tax-deductible.

There are so many options attached to mortgage deals that selecting the one for your personal circumstances is the first consideration. Will you benefit from extra features such as a redraw facility; mortgage offset account or a line of credit? Or should you go for a basic “no-frills” loan and make additional payments whenever you can?

Key tips for making the right decisions and taking control of your mortgage include:

• Shop around for the best possible interest rate. Even though rates are historically low, interest is the single largest cost.
• If you want special features, compare loans that offer what you want. Paying a higher rate for a loan with features you do not fully utilise may end up costing more in the long run.
• Steer clear of pushy sales people or loan minimisation ‘experts’ who try to pressure you into switching loans, or use other aggressive sales tactics. Always work with a professional who has your best interests in mind.
• Ask if your current lender can match the best deal you have been offered or offer you a better loan than your current one.
• If you decide to refinance, calculate the account fees and costs associated: application fees, stamp duty, valuation and legal fees and make sure you’ll be better off.
• Make extra payments whenever you can and consider weekly or fortnightly repayments instead of monthly. This is particularly important in the early years of the loan when repayments are attributed more to interest.

Selecting the right mortgage and payment method may make thousands of dollars difference to your wealth in future years, so carefully assess your needs and seek professional advice at the beginning. It will save you time and money.