A regular loan health check can save you thousands of dollars—yet most Australians never review their mortgage after settlement. This guide walks you through exactly how a mortgage broker conducts an ongoing loan review, so you can assess your own loan or know what to expect when working with a broker.
What Is a Loan Health Check?
A loan health check is a comprehensive review of your current mortgage to determine whether it still suits your needs and offers competitive value. It examines your interest rate, loan features, lender policies, and changing circumstances to identify opportunities for savings or improvement.
How often should you do one? At minimum, annually—or whenever your circumstances change significantly (job change, new baby, property value increase, or when fixed rate periods end).
Why Regular Reviews Matter
- Interest rates change: The rate you got 2 years ago may no longer be competitive
- Lender policies change: Your current lender may have changed terms, fees, or features
- Your circumstances change: Income growth, equity gains, or lifestyle changes affect your options
- New products emerge: Better loan products come to market regularly
Step 1: Rate Competitiveness Check
The first and most important step is comparing your current interest rate against what's available in the market. Here's how brokers do it:
How to Check Your Rate Competitiveness
- Find your current rate: Check your latest loan statement or log into your lender's online banking. Note both your rate and rate type (variable, fixed, or split).
- Determine your LVR bracket: Calculate your Loan-to-Value Ratio (loan balance ÷ property value × 100). This affects what rates you qualify for:
- Under 60% LVR: Best rates available
- 60-80% LVR: Competitive rates, no LMI
- 80-90% LVR: Higher rates, may need LMI
- Over 90% LVR: Limited options, higher rates
- Compare against market benchmarks: A competitive rate in May 2026 for owner-occupied, variable P&I loans sits around:
- Under 60% LVR: 5.69% - 6.09%
- 60-80% LVR: 5.89% - 6.29%
- 80-90% LVR: 6.19% - 6.59%
- Calculate the gap: If your rate is 0.30% or more above comparable products, it's worth investigating further.
Pro Tip: The Loyalty Tax
Banks often offer their best rates to new customers while existing customers pay a "loyalty tax." If you haven't contacted your lender about your rate in the past 12 months, you're likely paying more than you need to. Call your lender and ask: "What's the best rate you can offer me based on my loan history?"
Step 2: Loan Features Audit
Interest rate isn't everything. Your loan features can make a significant difference to flexibility and long-term costs.
Essential Features to Review
| Feature | What It Does | Do You Have It? |
|---|---|---|
| Offset Account | Savings balance reduces interest charged daily | Essential if you have savings |
| Redraw Facility | Access extra repayments if needed | Important for flexibility |
| Extra Repayments | Pay more than minimum without penalty | Critical for paying off faster |
| Repayment Flexibility | Weekly, fortnightly, or monthly options | Fortnightly saves years |
| Split Loan Option | Mix fixed and variable portions | Useful for rate hedging |
| Portability | Transfer loan to new property | Important if upgrading soon |
Features Audit Checklist
- ☐ Do I have an offset account? Is it 100% offset or partial?
- ☐ Can I make unlimited extra repayments without fees?
- ☐ What are my redraw limits and fees?
- ☐ Can I switch between fixed and variable without major costs?
- ☐ What fees do I pay monthly or annually?
- ☐ Is my loan portable if I sell and buy another property?
Step 3: Lender Policy Changes Review
Lenders regularly update their policies, fees, and product terms. Changes that might affect you include:
Common Policy Changes to Watch For
- Fee increases: Annual fees, monthly fees, or transaction fees may have risen
- Feature removals: Some lenders remove features from older products
- Rate repricing: Your product may no longer be competitive even within the same lender
- Offset changes: Some lenders have reduced offset account benefits
- Cashback offers: New products may include refinance incentives
Red Flags Your Lender Has Changed Policies
- You received a letter about "changes to terms and conditions"
- New fees appeared on your statement
- Your product name has changed or is "no longer available to new customers"
- You can't access features that were previously available
- Your rate increased more than the RBA cash rate change
Step 4: Refinance Decision Framework
Once you've completed your review, use this framework to decide whether refinancing makes sense:
The Refinance Calculation
Refinancing should only proceed if the net benefit exceeds the costs and effort. Here's the calculation:
- Calculate annual savings:
(Current rate - New rate) × Loan balance = Annual interest savings
Example: (6.5% - 6.0%) × $500,000 = $2,500 per year - Total switching costs:
- Discharge fee (current lender): $150-$400
- Government registration fees: ~$200
- Valuation (if required): $0-$400
- Fixed rate break costs (if applicable): Varies widely
- Less: Cashback from new lender (if offered): -$2,000 to -$4,000
- Calculate break-even period:
Switching costs ÷ Monthly savings = Months to break even
Example: $600 costs ÷ $208/month savings = 2.9 months
When to Refinance: Decision Rules
- Green light: Break-even under 12 months AND you plan to keep the loan 3+ years
- Yellow light: Break-even 12-24 months — worth doing if features also improve
- Red light: Break-even over 24 months OR you're selling within 2 years
Non-Financial Factors to Consider
- Time and effort: Refinancing takes 2-4 weeks and requires paperwork
- Credit enquiry: A new application creates a credit enquiry (minor impact)
- Relationship value: If your current lender provides excellent service, factor that in
- Future plans: If you're planning major changes (kids, job change, property purchase), timing matters
Loan Health Check Checklists by Situation
Use the checklist that matches your situation to conduct your own loan review:
First Home Buyer Checklist (1-3 years into your loan)
- ☐Rate check: Is your rate still competitive? First-timer deals often end after 12-24 months.
- ☐LVR improvement: Have you dropped below 80% LVR? You may qualify for better rates and remove LMI from future borrowing.
- ☐Offset usage: Are you using your offset account effectively? Salary crediting can save hundreds per year.
- ☐Repayment frequency: Have you switched to fortnightly? This alone can shave years off your loan.
- ☐Extra repayments: Are you making any extras? Even $100/month makes a significant difference.
- ☐Income growth: Have you had a pay rise? Consider directing extra income to your mortgage.
Upgrader/Growing Family Checklist
- ☐Equity position: How much usable equity do you have? (Property value × 80%) - loan balance = usable equity.
- ☐Borrowing capacity: Has your household income changed? This affects how much you can borrow for your next property.
- ☐Portability: Can your current loan be transferred to a new property? This can save refinancing costs.
- ☐Fixed rate timing: If you're planning to sell, avoid fixing your rate (break costs can be significant).
- ☐Additional costs buffer: Do you have funds for stamp duty, moving costs, and renovations?
- ☐Bridging options: Have you explored bridging finance or simultaneous settlement options?
Property Investor Checklist
- ☐Rate competitiveness: Investment rates are typically 0.2-0.5% higher than owner-occupied. Are you paying more?
- ☐IO vs P&I review: Is your interest-only period ending? What's your strategy for the switch to P&I?
- ☐Loan structure: Are your investment and PPOR loans properly separated? Cross-collateralization can limit flexibility.
- ☐Deductibility: Is your loan structured to maximize tax-deductible interest? (Consult your accountant.)
- ☐Portfolio equity: Have your properties increased in value? You may be able to access equity for the next purchase.
- ☐Cash flow analysis: Is your rental income covering costs, or has the gap widened with rate rises?
Refinancer Checklist (Actively Considering Switching)
- ☐Rate gap confirmed: You've verified your rate is 0.30%+ above comparable products.
- ☐Break costs checked: If on fixed rate, you've obtained a break cost quote from your lender.
- ☐Property valuation: You have a realistic estimate of your current property value.
- ☐Income documentation: Your payslips and tax returns are current (within last 60 days).
- ☐Credit report clean: No recent missed payments, defaults, or excessive credit enquiries.
- ☐Break-even calculated: You know how many months until savings exceed switching costs.
- ☐Cashback offers: You've checked current cashback offers that could offset switching costs.
When to Get Professional Help
While you can conduct a basic loan review yourself, there are situations where working with a mortgage broker adds significant value:
- Complex situations: Multiple properties, self-employment, or unusual income structures
- Major decisions: Upgrading, accessing equity, or debt consolidation
- Time constraints: A broker handles the research, paperwork, and lender negotiations
- Comparing 30+ lenders: Brokers have access to products you can't get direct
- Negotiating rates: Brokers often negotiate better rates than advertised
The Broker Advantage
A good mortgage broker doesn't just find you a lower rate—they identify opportunities you might miss, handle the paperwork, and manage the process end-to-end. Their service is typically free to you (paid by the lender), so there's no cost to getting professional advice.
Summary: Your Annual Loan Review Action Plan
- Every 12 months (minimum): Check your rate against market benchmarks
- After rate changes: Review whether your lender passed on the full change
- After income changes: Reassess your strategy and borrowing capacity
- Before fixed rates expire: Start reviewing options 90 days before expiry
- When property values rise: Check if you've crossed an LVR threshold
Calculate Your Potential Savings
Want to see exactly how much you could save? Use our free calculators:
- Refinance Calculator — See if switching lenders makes sense
- Extra Repayment Calculator — Model different repayment scenarios
- Borrowing Calculator — Check your current borrowing capacity
Next Steps
- Complete the checklist that matches your situation above
- Use our refinance calculator to estimate potential savings
- Book a free loan review to get a professional assessment of your options
