Home Loan Health Check: Why Every Homeowner Should Review Their Mortgage Every Two Years
Important Note: This article provides general information only and does not constitute financial advice. Lending criteria, rates and requirements can vary between lenders and may change over time. Consider your circumstances and seek professional advice before making financial decisions.
Your home loan might have started with the right interest rate, features and repayment structure. But your circumstances probably haven't stayed exactly the same.
Maybe your income has increased, your home is worth more, your mortgage balance has fallen or your family’s expenses have changed. Perhaps your fixed-rate period has ended, you’ve built up savings in an offset account or you’re thinking about renovating or buying another property.
Yet many homeowners continue making the same mortgage repayments year after year without checking whether their loan still suits them.
That’s where a home loan health check can help.
Reviewing your mortgage every couple of years gives you an opportunity to look at your interest rate, loan features, repayments, remaining balance and broader financial goals. It doesn't necessarily mean you need to refinance. Sometimes your existing loan is still suitable. But without reviewing it, you may not know whether there are better options available.
In this guide, we'll explain why reviewing your home loan every two years can be worthwhile, what you should check and how a mortgage review could help you make more informed decisions about your finances.
What Is a Home Loan Health Check?
A home loan health check is essentially a review of your existing mortgage to determine whether it still suits your current financial circumstances and goals.
It can involve looking at:
Your current interest rate
Remaining loan balance
Loan term
Monthly repayments
Loan features
Available equity
Offset or redraw facilities
Current financial commitments
Potential refinancing options
Your future property plans
Your circumstances can change significantly over two years, so a mortgage that was suitable when you first took it out may no longer be the most appropriate option.
Richmond Residential provides residential property loan solutions for homeowners considering refinancing, debt consolidation, restructuring or other changes to their home loan.
Why Review Your Home Loan Every Two Years?
There isn't a rule that says every homeowner must refinance every two years. The purpose of a regular review isn't necessarily to change your loan. Instead, it's about making sure you aren't simply paying a mortgage on autopilot.
Here are some reasons a regular review can be useful:
1. Your Interest Rate May No Longer Be Competitive
Interest rates and lender policies change over time. A loan that was competitive when you applied may not remain competitive indefinitely. New products may become available, while existing lenders may change their pricing or loan features.
Even a seemingly small difference in interest rate can make a meaningful difference over a large home loan balance.
For example, if you have a substantial mortgage, reducing your interest rate by even a fraction of a percentage point could potentially reduce the amount of interest paid over time.
However, the lowest advertised rate isn't automatically the best option. You should also consider fees, loan features, flexibility and whether the product is suitable for your circumstances.
A home loan review allows you to compare the overall value of your current loan with other available options.
2. Your Financial Situation May Have Changed
Think about where you were financially when you first took out your mortgage. Perhaps you were earning less, had fewer savings or had different financial commitments.
Two years later, you may have:
Received a salary increase
Paid down other debts
Built up savings
Reduced your credit card balances
Started a business
Changed employment
Increased your household income
These changes may affect your borrowing capacity and the type of loan options available to you.
A regular review gives you an opportunity to reassess your mortgage based on where you are today rather than where you were when you originally applied.
3. Your Home May Have Increased in Value
Property values can change over time.
If your home's value has increased while your mortgage balance has decreased, you may have built up additional equity.
Equity = Property value − Outstanding home loan
For example, if your property is worth $900,000 and your remaining mortgage is $550,000, you have approximately $350,000 in equity before considering other factors.
This doesn't mean all of that equity is necessarily available to borrow. Lenders will consider your income, existing debts, property value and other lending criteria when assessing any new application.
However, increased equity can potentially provide more options.
Depending on your circumstances, you may be able to use available equity for purposes such as renovations, debt restructuring or purchasing an investment property.
Richmond Residential also provides equity loan solutions for eligible borrowers looking to explore their available options.
4. You May Be Paying for Features You Don't Use
Home loans can come with a range of features, including:
Offset accounts
Redraw facilities
Flexible repayment options
Additional repayment facilities
Package arrangements
But having more features doesn't automatically mean you're getting better value.
If you're paying additional fees for features you rarely use, it may be a good time to review whether the structure still makes sense. On the other hand, you might discover that your current loan is missing a feature that could make managing your mortgage easier.
The key is to match the loan features with how you actually manage your money.
5. You Could Potentially Consolidate Other Debts
Over time, homeowners can accumulate different forms of debt, including credit cards, personal loans and car finance. Depending on your circumstances, refinancing or restructuring your home loan may provide an opportunity to consider debt consolidation. However, this needs to be approached carefully.
Moving short-term debts into a longer-term mortgage can reduce your immediate repayments but potentially increase the total interest paid over the life of the loan. Before consolidating debts, consider the interest rate, fees, repayment period and overall cost.
Richmond Residential offers debt consolidation home loan options for homeowners who want to explore whether restructuring their debts may be appropriate.
6. Your Property Goals May Have Changed
Your mortgage should support your broader financial plans.
When you first purchased your home, your only goal may have been to get into the property market.
Today, you might be thinking about:
Renovating your home
Buying an investment property
Purchasing a larger home
Paying off your mortgage sooner
Reducing monthly repayments
Building a property portfolio
Preparing for retirement
A loan structure that worked for your original goal may not necessarily be suitable for your next one. This is one of the biggest reasons a mortgage review can be valuable.
What Should You Check During a Home Loan Health Check?
A useful mortgage review should look beyond the interest rate.
Interest Rate
Compare your current rate with other suitable loan options. Don't focus only on the headline rate. Check whether the advertised rate applies to your circumstances and consider the overall cost of the loan.
Loan Balance
Check how much you still owe and how much progress you've made since taking out the mortgage. Understanding your current balance can help you assess your future repayment strategy.
Remaining Loan Term
If you've been paying your mortgage for several years, review how long you have left. You may want to explore whether increasing repayments could help you reduce the loan term, provided this fits comfortably within your budget.
Loan Features
Review whether you actually use features such as an offset account or redraw facility. Features can be useful, but they should serve a purpose rather than simply adding complexity to your mortgage.
Fees and Charges
Look at ongoing fees, package fees, annual charges and potential refinancing costs. A loan with a lower interest rate isn't necessarily cheaper once all costs are considered.
Repayment Structure
Check whether your current repayment arrangement still suits your cash flow. If your income has increased, you may have an opportunity to make additional repayments. If your circumstances have changed, you may need to explore a different structure.
What If You Have Built Up Significant Equity?
If your property value has increased, a mortgage review can also help you understand your current equity position and whether it may provide additional borrowing options.
Some homeowners may use available equity to fund renovations or contribute towards another property purchase, subject to lender approval, borrowing capacity and their ability to service the additional debt. For investors, equity may also form part of a broader property portfolio building strategy.
It is important to remember that accessing equity increases your overall debt. Equity is not free money, and any additional borrowing should be considered alongside the potential costs, repayments and longer-term impact on your finances.
When Should You Consider Refinancing?
A home loan health check does not automatically mean you should refinance. It is an opportunity to review your current loan and determine whether it still suits your circumstances and goals.
Refinancing may be an option if:
Your current interest rate is no longer competitive
Your financial circumstances have improved
Your home has increased substantially in value
You want different loan features
You want to consolidate certain debts
Your existing lender no longer suits your needs
You want to access available equity
Your financial goals have changed
Before refinancing, consider the costs involved, including potential application, valuation and discharge fees, as well as any other charges that may apply. The potential benefits should be weighed against the costs and effort involved in switching loans.
Refinancing is not always necessary. Your existing lender may already offer a competitive rate and suitable features, and switching may not provide enough benefit to justify the associated costs.
A mortgage review should therefore focus on comparison and suitability, rather than automatically changing lenders. Richmond Residential can compare residential loan options from a range of bank and non-bank lenders and help you understand whether refinancing or restructuring may suit your circumstances.
How Richmond Residential Can Help With Your Home Loan Review
A mortgage review can be difficult to navigate on your own, particularly when comparing different lenders, interest rates, loan features and refinancing costs.
Richmond Residential can help you assess your current position and explore suitable home loan options.
Our residential property loan service covers options, including:
New purchase home loans
Refinancing
Debt consolidation
Equity release
Investment loans
First home buyer loans
Senior equity release
With access to a broad panel of bank and non-bank lenders, Richmond Residential can compare available options based on your financial situation and long-term goals.
Final Thoughts
Your mortgage is likely to be one of the biggest financial commitments you'll make, so it shouldn't be something you simply set up and forget.
A home loan health check every two years can give you an opportunity to review your interest rate, loan features, repayments, equity and overall financial position. You may discover that your current mortgage is still the right fit.
Or you may find an opportunity to reduce costs, restructure your loan, access equity or choose a different loan that better matches your goals. The important thing is to review your options before making a decision.
If you haven't looked closely at your home loan for the past couple of years, now could be a good time to review where you stand. Contact Richmond Residential to discuss your current mortgage and explore whether your home loan still works for you.
Frequently Asked Questions
How often should I review my home loan?
There is no fixed requirement to review your mortgage every two years, but a review around every two years can be a useful habit. You should also consider reviewing your loan when your financial circumstances, interest rate, property value or long-term goals change.
Does a home loan review mean I have to refinance?
No. A review is simply an opportunity to assess your current mortgage and compare suitable alternatives. If your existing loan remains competitive and appropriate, staying with your current lender may be the right decision.
Can I refinance if I have built up equity?
Potentially. Increased equity may improve your borrowing position, but lenders will also consider your income, expenses, debts, credit history and other requirements before approving additional borrowing or a refinance.
Should I refinance just to get a lower interest rate?
Not necessarily. A lower rate can be attractive, but you should consider the total cost of switching, including fees and loan features. The right loan is about overall suitability, not just the advertised interest rate.
Can a home loan review help me pay off my mortgage faster?
It may. Reviewing your repayments, interest rate, loan structure and available features could identify opportunities to reduce interest or make additional repayments. However, the right strategy depends on your financial circumstances and loan terms.
Can I use my home equity to buy an investment property?
Depending on your circumstances, available equity may potentially be used towards an investment property purchase. The lender will still assess your borrowing capacity and ability to service the additional debt. You should also consider the risks involved before increasing your overall borrowing.
What documents might I need for a home loan review?
Depending on what you're looking to change, you may need information about your current mortgage, income, expenses, existing debts, assets and property value. Having recent financial information available can make the review process easier.
Is every two years too often to review a mortgage?
No. Your mortgage doesn't necessarily need to change every two years, but reviewing it periodically can help you stay aware of whether it remains competitive and suitable. You should also review your loan sooner if there is a major change in your financial circumstances or property plans.
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