To say that the process for applying for a mortgage is strenuous, complicated and time-consuming is an understatement. But you’ve gathered all your information, let your broker put it through to the banks, and you’ve been approved. Sitting in your new home, you’re thinking “what’s next?” Our mortgage and financial experts have put together a list of tips on what to do after your loan is settled.
1. Confirm Accounts Are Transacting
After you have gotten your loan, the most important thing you need to do is ensure that your income is being put through to the right account to pay off your mortgage. This can be done by checking your loan balance after transacting a small test amount into that mortgage account. Not only will this confirm that your money is going into the right account and help you avoid any late payment penalties, but you will also be able to determine how long this money takes to transfer. With this information, you can schedule your mortgage repayment each week appropriately.
2. Update your Address With Relevant Parties
After your loan is settled, it is important to update your address with relevant parties. This ensures that appropriate information is given directly to you. This could be from financial institutions, your employer, friends, family, organisations you regularly interact with, and the government. Updating your address with the government is especially important, as they may have a toll notice, fine or another piece of important documentation that requires urgent attention.
3. Build Back to a Positive Cash Flow Using a Budget
The mortgage application process is an expensive time, with significant amounts of out of pocket expenses. These include things such as stamp duty, legal fees and mortgage deposits. Getting back to stable financial footing for the future is important during this stage, so budgeting is key. Check out our budgeting strategies here.
4. Set Up Mortgage Tracking
Being able to track your mortgage is key to keeping on top of repayments and having a picture of your short-term financial future. This can usually be seen quickly through a banking app, so make sure that netbanking is set up with your mortgage provider.
5. Explore Ways to Reduce Interest Payments
If affordable, considering upping repayments to fortnightly transactions, or adding extra repayments is a great way to save on interest payments over the course of the mortgage. These could come from a tax return or additional income from a promotion with work. However you do it, paying back debts as quick as possible saves money over the long term.
Offset accounts are everyday accounts that are linked to your mortgage. Depositing salary and savings into this account offsets against the loan amount, with interest being charged on the difference. For example, if your mortgage balance was $500,000, but your offset account had $25,000 in it, an industry-standard mortgage rate of 2.5% mortgage interest would be charged on $475,000. This would reduce monthly interest repayments from $1041.67 to $989.58, saving you $625.08 annually.
Getting properly settled after a draining mortgage application process is important in going on to build future financial opportunities. Our award-winning team has been helping out clients after their loan is settled for over 15 years. If you’d like to have a quick chat please use our live chat. Alternatively, you can book a free consultation or contact us here.