If you have an ASB home loan then you are able to refix your loans online by simply accepting the fixed term and rates offered online.
The bank have made this a very simply process and we hear it has proven popular with many of there customers now refixing their home loans online via their internet banking.
But the simplicity comes with some problems too.
Don’t Refix Online Without First Checking
Checking you are getting the lowest home loan interest rates.
The obvious problem is with the home loan interest rates being offered.
The bank is not necessarily going to automatically offer you the lowest interest rates. The system that they have set up within your interest banking is an automatic system and generally the bank will offer you the advertised home loan interest rates which may be competitive, but may not be the best that they can offer.
Of course the bank is in the business of making profits, so why would it give away profits by unnecessarily offering you lower home loan rates?
Your mortgage adviser should know what is a competitive interest rate is as most advisers will be dealing with a range of banks on a daily basis. It’s a simple process to check with a mortgage adviser and they will be able to check the rate offered before you refix your ASB home loan.
Checking your loan structure suits
An adviser will generally review your loan structure and may have a discussion with you about it or suggest some changes.
Often when the mortgage was first arranged there was minimal planning or your situation might have changed. A good mortgage adviser will always look at the way your loans are structured to ensure you have the opportunity to pay your home loans off faster.
What about other debt?
A lot of people have some other debt.
It may be a credit card which is not getting paid in full each month, a loan for a car or boat, a hire purchase or a store card. Some of these may be interest free and others have high interest rates with some being 20% of higher – check your credit card statement, your GEM Visa or Farmers Card and see what they charge.
It makes more sense to refinance this type of debt to the much lower home loan interest rates and pay it off over a shorter time.
A Quick Check Saved Carl Over $500
This week we were refixing a loan for Carl.
He is a long time client who we arranged the mortgage for some years ago and it was time to refix a loan for him and his wife.
They had one loan due to come off fixed and ASB had offered their special 1-year rate of 3.95% which is very competitive, and so the advice was simply to refix at that rate.
But at the same time we looked at his other loans – the loans not due to be refixed.
One of those loans was fixed for another 2-years at 4.35% where the rate we were offered was 4.19% – 0.16% less.
The problem with loans that are fixed is that there is a break fee to get out of a fixed term, and the bank do not have an online system to review these. We checked and the break fee was only $20 and yet on a loan of $316,339 the savings by getting the lower interest rate was just over $500 per year.
That alone is one good reason to check with your mortgage adviser before refixing your ASB loans.
How much do you want to save?
