7 Critical Factors to Consider When Choosing a Mortgage
John J Maxwell
Group CEO: The Uptick Group | Director at Cocalex Consulting | M: 0434 544 225
How do I choose the right mortgage?
If you own your own home, you’ll appreciate finding the right loan can be extremely challenging. The more you learn, the more there is to learn. A good mortgage broker will have access to somewhere between 2000-3000 different loan products. So how can you possibly know if you have made the right decision?
If you are happy paying your mortgage over the full term and paying the bank as much as you paid for the property, in interest, you don’t need to change anything. However, if you have heard the urban myth that some home owners have reduced their mortgage in record time, and even completely eliminated their home loan in as little as 10 – 15years, then read on… this is written specifically for you!
Let's take a look at a few critical factors that can inhibit or enhance your debt reduction strategy:
- Features
Features such as offset accounts, redraw and eliminating fees and charges can enhance your debt reduction. However, if you do not choose the right features or your circumstances change, your benefits may be diminished. Your money manager can guide you through the hundreds of loans on the market.
2. Flexibility
As life changes, often, so does your finance requirements. By choosing the right loan with built in flexibility, and with the assistance of your money manager, you can quickly and easily adjust your loan to include the right features you require.
3. Minimum payments
All too often, I come across clients who are have not engaged a professional money manager and are just paying minimum repayments on their loan. In this instance the loan is not going to reduce any faster than the term of the loan in most cases.
4. Accountability
As a sporting crazed nation, we all know too well the importance of sporting stars having a top coach. Someone to keep you on track, to push you beyond your own limits, to guide you, set your routine, and monitor your progress so you can achieve the results few get to enjoy. A good money coach is worth their weight in gold.
5. Redraw
Most loan come with the ability to redraw any savings that you have accrued in advance of minimum repayments within your loan. This can be great in an emergency but without stringent management of your money, can reverse all the hard work in getting ahead on your loan.
6. Peace of mind
Depending on your sensitivity to interest rate movements, it can be reassuring to ask your professional money manager about split loan options. In this way you can tailor make a loan to suit your needs and not lose the flexibility and features you desire. If the interest rates are moving upwards, a fixed loan portion can be greatly beneficial. If there is uncertainty what will happen with interest rates, then keeping part of your mortgage variable can hedge your loan giving you the best of both worlds.
7. Time to Pay off
Many banks and brokers set the loan up on a 25 or 30-year loan. Unless you are well into building wealth through investing in property, you don’t want to be paying a home loan for that long right? The term of the loan set how long it will take you to pay off the loan. You can choose the term that suits you depending on your strategy. The term of the loan more importantly sets how much interest profit the bank will ultimately earn from your borrowings. The shorter the term, the less interest you pay. This results in more money in your pocket and more choices for your future financial plans!
If you have any questions or contributions relating to this article, please take the time to comment below and share your thoughts or opinions for the benefit of others reading this. No doubt this topic commands interaction, innovation and collaboration. The more answers that are delivered, the more questions that will arise. If you have any personal questions or queries, please feel free to contact me on 0434 455 225 or email: john@cocalexconsulting.com.au
About the author:
John Maxwell is founder and Senior Finance & Business Strategist at Cocalex Consulting. John has over 17 years' experience in the financial services sector, and has owned and managed 9 mortgage franchises and has developed a background across the holistic financial services realm. He has particular focus and passion for: Leadership Training and Development, Franchise Development and Business Networking.