It’s not just the kids who keep asking ‘are we there yet? So are mortgage holders in relation to the 10 rate rises we have had since April 2022.
The consensus seems to be that we are not there yet, but it is getting close.
Your mortgage is one of the biggest – and often, most expensive – commitments you will ever make. To help alleviate this burden, it is important to regularly review your mortgage to ensure you have the right structure, product and interest rates in place.
So, when is the right time to review a mortgage? Well, annual reviews can be a good place to start, but there are some other indicators that might make it relevant to do it more than once a year.
1 – Has there been a change in your personal financial situation?
Have you got any new financial commitments – such as a car loan, new property, or a change in your employment conditions or business position. Are the wider economic conditions – inflation and interest rates – starting to impact your cashflow?
The key with managing debt is to be on the front foot, as seeking to make changes when you are in a less desirable financial position makes it much harder to effect change. This has been exacerbated recently with tighter lending policies being imposed on borrowers.
2 – Do you know how your loans are structured?
If you are not certain how your loans have been structured, you need to do a review.
For example have any of your loans been cross-collateralised, are your offset accounts against the right loans, are they structured to reflect their tax status, and how are you managing cashflow?
Our team can work through your entire debt position and provide an explanation of where you are at and what you might want to consider. We can also directly broker both residential and commercial loans where relevant.
3 – Do you have any unsecured debt?
Unsecured debt such as credit card bills, personal loans, student loans and some car loans, is debt that is not secured by collateral.
It is not that such debt is wrong, but it is typically more expensive in relation to fees and interest rates, and it can damage your credit score.
Look at your total debt situation, not just some of your debts in isolation, to work out not only how best to structure them, but how to pay them off as fast as possible.
4 – Are you thinking about investing?
You need a clear picture of what the financial implications are when investing. You need to analyse the proposed investment, be it direct shares, managed investments, real property, a business acquisition, or something more exotic.
What is the expected yield, what are the upfront and ongoing costs, have you allowed buffers for replacing roofs or hot water systems, and how are you placed to handle any further interest rate increases.
Another one we commonly see is clients buying an investment property now to retire into later. You need to set this up correctly now, not down the track.
Our dedicated in-house finance team, working hand in hand with your financial adviser, can conduct a full debt review for you. All you need to do is reach out to your adviser, or email the finance team directly at email@example.com.