HACK YOUR HOME LOAN
Brooke Reynolds of Rapson Loans and Finance explains why many of us pay more on our home loan than we need to, and how a simple mortgage check-up could save thousands.
When people first take out a mortgage, the interest rate usually gets most of their attention. If the number looks decent and the payments seem manageable, they just shrug and carry on. But that’s how so many Kiwis end up overpaying their mortgage without even knowing it.
And when I say overpaying, I’m not talking about a few dollars here and there. I’m talking thousands – sometimes tens of thousands – over the life of the loan. All because the structure isn’t working as hard as it should.
Your mortgage isn’t really a “set and forget” arrangement. Life changes, interest rates shift, and banks regularly adjust their offers, but many loans stay exactly the same for years. Without a review, it’s easy to keep paying more than necessary.
One of the biggest culprits is having everything on the wrong fixed term. People lock something in years ago and assume it still makes sense. But what suited you in 2021 might not suit you now. Maybe you’ve had a pay rise, or your kids have left home, or rates have dropped, but your loan hasn’t kept up.
Another way people overpay is by not splitting their lending. Having all your lending on one fixed rate might feel simple, but it also means you're at the mercy of whatever the market is doing the day that rate expires. Splitting your loan across different terms can smooth out the bumps and stop you from getting whacked by big swings.
Then there’s the classic one: not reviewing your mortgage regularly. I review my clients’ loans every 6 to 12 months, because even tiny tweaks can shave years (yes, years) off the mortgage. Most banks don’t ring you up and say, “Hey, we’ve got a better deal for you!”, but that doesn’t mean a better deal isn’t out there. And let’s not forget the cashbacks, discounted rates and competitive offers floating around. Many homeowners just don’t realise they’re there.
If you haven’t reviewed your mortgage in the last year, there’s a good chance you’re paying more than you should. Not because you’ve done anything wrong, just because mortgages need attention, the same way your car or your health does. A quick check‑in could save you thousands.