Advice matters
How to ensure your mortgage is still fit for purpose

Your home loan is something that might stick with you for quite a long time.

It’s common for a mortgage to be set over a 25 or even 30-year term.

But as you go through life, your circumstances will change. How can you make sure your loan is still fit for purpose?

Regular review

It could be a good idea to make sure you regularly check in on your mortgage.

When it comes up for refixing, you might consider whether you could afford to increase your repayments a bit, or make a lump sum payment to reduce the principal owing.

You might also want to think about the structure you’re using, or whether the lender you’re with is an appropriate fit. These are questions that we, as advisers, are well placed to help you work through.

Regularly reviewing your loan settings can make it easier for your loan to move with you as your circumstances change, and potentially help you identify opportunities to save money or maximise your loan’s potential as a financial tool.

Check your interest rate options

When it comes time to refix your loan, you will probably be offered a range of different terms and interest rates to choose from. Depending on your situation, it may not be appropriate to just choose the lowest rate.

When you’re weighing up your options, you might want to think about things like the likely future path for interest rates, your capacity to cope with higher repayments and your risk appetite. Some borrowers find splitting their loan into smaller pieces and fixing each for a different term offers more flexibility.

Your repayment strategy

Your repayment strategy may vary depending on your circumstances. Some people aim to set their repayments as high as they can cope with, to pay off their loans faster.

Others aim to make lump sum additional payments where possible. Other borrowers may opt for an interest-only setting for a while, if it makes sense to direct their cash flow elsewhere.

Your repayment strategy may well be unique to you but understanding it – and whether you’re on track – will help your overall financial picture.

How to stay informed

There is a lot of commentary around about the economic factors that could affect your mortgage now and into the future. Banks put out regular updates from their economists, and the main media outlets usually break those down into an accessible format. You could also keep an eye on key indicators from Stats NZ and the Reserve Bank, and check in with a SHARE mortgage adviser when you have concerns or questions – we are in the market every day and have a good sense of the current lending environment.

Want to talk?

If you’d like to run a ruler over your current home loan settings, or you’re thinking about taking out new lending, get in touch with us. We’re home loan experts and can give you up-to-the-minute advice on lending market conditions.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.