Many of the leading financial advisers will tell you that it is important to carry out a financial check-up every year, but why? As time goes by, many things are bound to change in your life. This being the case, a mortgage that was a good fit for you a few years ago may not be the best fit today. For instance, your lifestyle changes, changes in the size of your family, a job change or just a change in your retirement objectives can affect your finances.
Oblivious to this fact, a considerable amount of people today just wait for their renewal letter from the creditor before making this move. In such a case, the borrower is more likely to go back to the same creditor for the same loan, which may not be the right fit at that time. Rather than making this financial mistake, you should consider having a financial check-up every year. If this does not encourage you to review your mortgage, the new ‘stress test’ rules that are soon to be enforced will make you think twice. Discussed below are some of the main reasons why you need to review your mortgage before the new rules are enforced.
If you currently have a high interest rate on your credit card debt, reviewing your mortgage can help you lower the interest rate. To achieve this, you need to take advantage of the equity in your home and use it as your debt consolidation tool. By consolidating the debt, the interest rate on your debt will be reduced. Additionally, the monthly payments on your debts will also be reduced. By so doing, you can start saving on your debt repayment, hence will have more money to invest or save for your retirement.
Based on statistical findings, mortgage renewals are some of the most neglected financial decisions by homeowners today. This may be attributed to the notion by many homeowners today that shopping for a new lender is inconvenient and time consuming. Guided by this notion, most of the homeowners end up renewing their mortgage with their current financial institution. If you took time to shop for the best mortgage in the market, you are more likely to find a better deal elsewhere. In fact, it is almost impossible for your current creditor to offer you the best rate when renewing your mortgage.
Contrary to what you may be thinking, bank loan renewal rates are comparatively high. This is because homeowners do not take time to search for a better offer; and the lenders know this. The lenders are aware that you are less likely to take the same diligence you did when applying for the first mortgage. As a result, the lenders offer insignificant incentives for mortgage renewals and hope that you sign the renewal notice once you get it.
If you are considering having your home renovated in the near future, you need to review your mortgage today. In this regard, you should make use of your home’s equity. You may do this by refinancing your current loan and taking advantage of the current lower rates. By so doing, you will have the opportunity to spread your loan repayment over a longer period, hence be using money at a rate that is lower than that of an unsecured personal line of credit or a credit card line of credit.
Like many other homeowners today, you may be unaware of what your mortgage can do for you. Provided that you stay in touch with your financial situation (by reviewing your mortgage annually), the mortgage can help you build wealth toward your retirement, improve your tax efficiency, consolidate high interest debts or renovate your home. To stay financially fit, do not wait until the new rules are implemented; review your mortgage today.