The Annual Home Loan Health Check

Your home loan is likely the largest financial commitment you'll ever make. Yet surprisingly, most Australians set and forget their mortgage, potentially costing themselves tens of thousands of dollars over the life of their loan. Just like your car needs regular servicing and your health requires annual checkups, your home loan deserves the same attention.

Why Your Home Loan Needs Regular Reviews

The Hidden Cost of Complacency

Many borrowers secured their home loan years ago and haven't looked at it since. This "loyalty tax" can be significant:

• Average rate difference: Existing customers often pay 0.5-1% more than new customers
• On a $500,000 loan: This equates to $2,500-$5,000 per year in additional interest
• Over 30 years: You could pay $75,000-$150,000 more than necessary

The Changing Landscape

The home loan market evolves constantly:

• New products are launched regularly with better features
• Interest rates fluctuate based on economic conditions
• Lender policies change, opening doors previously closed
• Your circumstances evolve—your loan should too

The 7-Point Annual Checkup Framework

Point 1: Interest Rate Analysis

What to Check:

• Your current interest rate vs. advertised rates
• Whether you're on a "revert rate" after a fixed period
• Comparison rates that include fees
• Any loyalty discounts you might be missing

Red Flags:

• Rate more than 0.25% above current market rates
• Paying standard variable after fixed rate ended
• No rate review in the past 12 months

Action Steps:

1. Note your current rate from your latest statement
2. Research current rates from at least 5 lenders
3. Calculate the potential savings of switching
4. Call your lender to negotiate before switching

Point 2: Loan Features Assessment

Essential Features to Review:

• Offset account: Is it linked? Is your balance optimized?
• Redraw facility: Have you accumulated accessible funds?
• Extra repayment flexibility: Are there limits or fees?
• Split loan options: Could a fixed/variable mix benefit you?

Questions to Ask:

• Am I actually using the features I'm paying for?
• Are there features I need but don't have?
• Have my needs changed since I got this loan?
• Could a simpler loan save me money?

Point 3: Fee Structure Review

Fees to Identify:

• Annual package fees (typically $300-$450)
• Monthly account keeping fees
• Transaction fees for extra repayments
• Offset account fees
• Rate lock fees if applicable

Cost-Benefit Analysis: Calculate whether your package fee savings exceed the fee itself:

• Package fee: $395/year
• Rate discount: 0.15% on $400,000 = $600/year
• Net benefit: $205/year

Point 4: Loan Structure Optimization

Structure Considerations:

• Principal and Interest vs. Interest Only: Are you building equity?
• Loan term remaining: Should you extend or shorten?
• Multiple loans: Could consolidation simplify and save?
• Security arrangements: Is your structure still appropriate?

Life Stage Alignment:

• Early career: Flexibility might be priority
• Family growth: Security and predictability matter
• Pre-retirement: Paying down principal accelerates
• Single income: Safety buffers become crucial

Point 5: LVR and Equity Position

Why This Matters: Your Loan-to-Value Ratio (LVR) affects your options:

• Above 80% LVR: You may still be paying LMI premiums
• At 80% LVR: You can request LMI removal and better rates
• Below 70% LVR: Premium products become available
• Below 60% LVR: Best rates and maximum negotiating power

Equity Calculation:

1. Get a current property estimate (not the purchase price)
2. Check your current loan balance
3. Calculate: (Loan Balance ÷ Property Value) × 100 = LVR%
4. Determine which LVR tier you fall into

Point 6: Repayment Strategy Review

Efficiency Measures:

• Are you making fortnightly payments? (Saves 4+ years on a 30-year loan)
• Making extra principal payments when possible?
• Parking surplus cash in your offset?
• Using redraw appropriately?

Optimization Opportunities:

• Switch from monthly to fortnightly payments
• Round up your repayments
• Direct bonuses or tax returns to your loan
• Automate extra payments when cash flow allows

Point 7: Life Circumstances Alignment

Major Life Changes Requiring Review:

• Salary increase or decrease
• Career change or new employment
• Separation or divorce
• Children leaving home
• Inheritance or windfall
• Approaching retirement
• Health changes affecting income capacity

Questions for Changed Circumstances:

• Does my loan still suit my income pattern?
• Is my repayment buffer appropriate?
• Should I be paying down faster or slower?
• Do I need to access equity for other purposes?

When to Schedule Your Checkup

Annual Review (Every 12 Months)

• Interest rate comparison
• Fee structure assessment
• Feature utilization check
• Basic repayment optimization

Trigger Event Reviews

Schedule an immediate review when:

• Fixed rate period ending (3 months before)
• Major life change occurring
• Market rates drop significantly (>0.5%)
• Considering property purchase or sale
• Financial stress emerging

Comprehensive Review (Every 2-3 Years)

• Full lender comparison
• Complete feature assessment
• Loan structure optimization
• Professional broker consultation

The Professional Checkup Process

What a Mortgage Broker Reviews

Credit File Analysis:

• Current credit score and history
• Existing credit facilities
• Any adverse events affecting options

Serviceability Assessment:

• Income verification and stability
• Living expenses and commitments
• Debt-to-income ratio calculation
• Buffer rate stress testing

Product Comparison:

• Rates across 30+ lenders
• Feature matching to your needs
• Fee analysis and total cost comparison
• Cashback and switching incentives

Recommendation Development:

• Customized options ranked by benefit
• Implementation roadmap
• Cost-benefit analysis for switching
• Ongoing support plan

What to Bring to Your Review

Essential Documents:

• Latest home loan statement (all loans)
• Current interest rate and loan balance
• Property value estimate or recent valuation
• Income documentation (payslips, tax returns)
• List of other debts and credit cards

Helpful Information:

• Your loan goals and priorities
• Planned life changes in next 2-3 years
• Questions about your current loan
• Features you wish you had

DIY vs. Professional Review

When DIY Is Sufficient

• Simple loan structure (one property, one loan)
• No major life changes anticipated
• Confident negotiating with your lender
• Time to research and compare options

When to Seek Professional Help

• Multiple properties or complex structures
• Recent separation or divorce
• Self-employed or complex income
• Considering significant changes
• Haven't reviewed in 3+ years
• Current lender won't negotiate

The Value of Professional Advice

Time Savings:

• Research across 30+ lenders: 20+ hours DIY vs. 2 hours with broker
• Negotiation and application: 10+ hours DIY vs. handled for you
• Documentation and settlement: Managed by professionals

Access to Options:

• Broker-only rates and products
• Lender relationships for difficult applications
• Knowledge of policy variations between lenders
• Awareness of upcoming changes and opportunities

Ongoing Support:

• Future rate negotiations
• Restructuring advice as needs change
• Early warning on rate movements
• Annual review reminders

Taking Action After Your Checkup

If Your Loan Is Healthy

• Document your current position
• Set calendar reminder for next year's review
• Continue optimizing within your current loan
• Consider small improvements (extra repayments, offset usage)

If Changes Are Needed

Minor Adjustments:

• Negotiate rate reduction with current lender
• Add or optimize offset account
• Switch to fortnightly payments
• Adjust loan split between fixed/variable

Major Changes:

• Refinance to a new lender
• Restructure loan completely
• Consolidate multiple debts
• Access equity for other purposes

Implementation Timeline

Quick Wins (1-2 weeks):

• Call lender to negotiate rate
• Switch to fortnightly payments
• Move savings to offset account
• Review and cancel unnecessary features

Medium-term Changes (1-2 months):

• Research alternative lenders
• Submit refinance applications
• Complete valuations and assessments
• Finalize new loan settlement

Long-term Optimization (3-6 months):

• Monitor new arrangements
• Adjust repayment strategies
• Build emergency buffer
• Plan for next review cycle

The Bottom Line

Your home loan is too important to ignore. An annual health check takes just a few hours but can save you thousands of dollars and ensure your mortgage continues to serve your changing needs.

Whether you conduct a DIY review or engage a professional, the key is making it a regular habit. Set a calendar reminder, gather your documents, and take control of your biggest financial commitment.

At Ding Financial, we offer complimentary home loan health checks for Australian women. Our team will review your current situation, identify savings opportunities, and provide clear recommendations—with no obligation to proceed.

Contact us today to schedule your free home loan checkup and discover if your mortgage is working as hard as you are.