What’s your financial plan? Lending (borrowing) is going to be a part of that.
Most of us have a five-year financial plan, or even a ten-year plan, of where would like to be financially.
Sometimes we don’t physically name it a ‘financial plan’, but thats what it is. And sometimes, that include borrowing or lending.
That plan is typically based on the needs and goals of your family and being in a better situation than you are currently – even if your current situation isn’t bad at all.
“What about a 30-year financial plan? Who can honestly look that far ahead with any degree of accuracy?”
We choose these ranges, 5 or 10, because they are tangible. A lot can happen in that time, but we can plot a course to navigate our way through whatever changes may occur.
Your typical Home Loan is a 30-year commitment. That’s a long time, and it can be difficult to understand what your situation might be at the end of that (hopefully with no more mortgage!)
Does that 30-year term align with your 5 or 10 year financial plan?
Does the Home Loan that you initially applied for still place you in a strong financial position?
Is that rate still competitive?
It’s reasonable to assume that within a 30 year period, your circumstances will change: your financial needs will change, where you live, how you spend, how you save, your ongoing commitments – these can all change over 30 years.
Unless you review your Home Loan regularly, chances are it isn’t going to change with you, over those 30 years.
And your bank will gladly sit back and let it see full-term. In fact, that’s a cornerstone of the banking business model (or their ‘lending plan’). This is why we provide an annual review of our clients home loans; to make sure that their loan is working for them, and suits their current financial needs.
Everyone’s needs are different. Here some examples of what we review with our client’s financial plans:
This the most important conversation we have with our clients. It might seem irrelevant to mention to us that you plan to upgrade your vehicle in two years time – but it can change the outcome significantly.
Fixed VS Variable and Interest Only VS Principal and Interest – this dictates how much you will pay in interest over the term, as well as your monthly repayments.
This includes things such as offset accounts, Redraw facility, parental leave etc. Each loan has a plethora of options, and it’s essential to have the right options for you.
One of the biggest drivers for people to review their loan, however as you can see, there are plenty of reasons to pick up the phone.
Fees and Charges
With a spotlight on reducing living costs, bank fees are on the chopping block.
We also take into account what products you use outside your home loan (credit card, accounts, personal loans etc.) and make sure they are as cost-effective as possible.
These are all critical considerations. Especially as banks adjust their policies and rates without notifying you how it directly affects your personal situation.
“It’s unlikely your bank will pick up the phone and offer you this kind of review..”
If you think you’re overdue for a review, or your circumstances have changed, call us, and we can sit down and have a conversation.