If you’re looking to shift your loans to a three-year fixed rate, knowing which of your loans to move is just a matter of prioritisation.
If we shifted everything or most of the loans in our portfolio to a fixed position with the current three-year fixed rates we can get with the five different lenders we use, we’d take about $25,000, but are we going to do that all in one hit? No we’re not. It's very dangerous to shift everything at one point in time to fixed so that at three years’ period of time, if everything changes and reprices, then you can find yourself in a lot of trouble.
Diversification and timing of when your mortgages go from fixed to variable or when they renew, point number one. Point number two, have a whole bunch of different lenders so you’re not reliant on any particular actions or behaviours of a lender.
So, it’s about prioritisation. We look at where you’re going to get the biggest impact quickly with the least amount of work, right? That’s how I see the world. That’s what we should be concentrating on.
There’s another lender here, it’s Macquarie. We have five loans with those guys. We have some reasonable pricing with them, we’ve worked out if we do the same rating we’re going to save ourselves $800. Right now, there are other priorities ahead of it and same with our mortgage with CBA. There are some savings there, but it’s not as considerable as these other two. That’s what we’ll get sorted.
This is one of the key benefits I believe (among many others) of using a mortgage broker. You can pick up the phone and speak to the person that makes decisions, not a call centre – I don’t have the appetite for it. That’s cool. A lot of our readers, if you don’t use a broker, that's cool. Deal directly with your bank or your lender. A lot of people like to manage their finances that way and that’s really good.
By the way, 54 per cent of all new loans now are done by a broker so more home owners or investors use a broker who don’t use a broker, which is good. And it’s grown from 36 per cent 10 years ago, so obviously what brokers are doing is beneficial for borrowers and as you can tell I’m pro-broker. I wouldn’t be doing this if I didn’t have a broker because I wouldn’t have the time, effort and bandwidth.
But when you see mortgage brokers in the marketplace, they’re a call to action, taught marketing speak, we say: “Come and get a home loan health check,” right. All we’re talking about right here is a home loan health check.
Everyone with a home loan should be checking to see whether or not it’s still the most appropriate home loan for them at any given time. My language there is quite deliberate, the most appropriate and that means that every single person has got different circumstances and blah, blah, blah. But you’ve got to stress test your mortgages.
And take responsibility for your mortgages. Your lender’s not going to call up and say: “Hi, Mr Phillip. Look, I just looked at your loan and yeah, I think we’re charging you too much. We’re going to take a percentage point off.” That just doesn’t happen right?
About the Blogger
Phil Tarrant is the editor of Smart Property Investment and is an avid and successful Aussie property investor.