Home Money 7 years ago Share Tweet If you’re like most people, your home loan is your largest monthly expense. But, how do you know if you’re paying too much for your home loan? Currently in Australia interest rates are at near record low and many people are seizing the opportunity to either buy for the first time or to pay off their mortgage as fast as they can. However many homeowners could be saving hundreds of dollars a month by reducing their interest rate by refinancing their home loan. Are You Paying Too Much for Your Mortgage Below You and Your Money have outlined some signs that you may be paying too much for your home loan, as well as some tips to help fix the situation if you are paying too much for your home loan. Your interest rate is above 6%. The RBA in Australia recently lowered interest rates once again, so homeowners who have rates above 6 percent may be able to save hundreds of dollars per month by refinancing their mortgage. If you have a home loan above 6 percent, you may want to see if you could be saving money. Using a home loan comparison website lets you quickly and easily compare mortgage offers from different lenders to determine if you could save money. It’s fast and easy, simple, and free. Your credit rating has improved since you got your loan. If your credit was fair or poor when you first took out your home loan, you may have had to pay a premium on your interest rate. Lenders reserve the lowest rates for borrowers with good to excellent credit. So if your credit has improved since you got your mortgage, you now may be paying too high of an interest rate. Its worth speaking to your bank to find out if this is the case. Your income has increased. Home loan costs are not just about the monthly payment. The total cost of your loan is also determined by what’s called the “term”–the amount of time you have to pay off the loan. If your income has recently increased, or you have paid off other expenses and debts and now have extra cash in your budget, you may want to consider refinancing to a shorter term. By refinancing from a 30-year fixed rate mortgage to a 15-year mortgage, you may be able to lower your interest rate and significantly lower the total interest you’ll pay over the life of the loan. This can add up to thousands of dollars in savings. Again there are numerous websites that can help you determine if it makes sense to refinance from a 30-year to a 15-year mortgage, based on current interest rates. Make extra repayments Check if your loan allows you to make extra payments, and if there are any fees for doing so. You may not be allowed to make extra payments on home loans with fixed rates. Even if you can make extra payments, there may be a limit on how much you can repay over the life of the loan. Find out if there are any fees or penalties if you pay off the loan early. Making extra repayments can cut your loan by years and can save you thousands. It is really worth looking into.