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As the dust settles on the Reserve Bank of Australia’s announcement that it will leave the cash rate on hold at 3% for the sixth month in a row, Mortgage Choice urges borrowers to consider spring cleaning their mortgage.

With cash rate rises almost certainly on the horizon and some lenders already increasing interest rates, savvy borrowers will be looking at their mortgage situation and the loan options available to them while monitoring any rate indications or actual movements their current lender makes. Why? To make sure the loan they have is still the best on the market.

Refinancing of home loans topped $1.5 billion in June 2009, which was double the activity of a year ago. This significant jump demonstrates the interest in switching loans, ‘topping up’ and/or debt consolidation at present, as the housing finance activity from first homebuyers begins to relax a little.

Senior corporate affairs manager for Mortgage Choice, Australia’s largest independently-owned mortgage broker, Kristy Sheppard said key influences for the rise in refinancing were low rates combined with rising consumer confidence and better-than-expected job stability.

"If a borrower could refinance to a different loan product that was on par with, or better than, their current loan feature-wise yet could save them thousands of dollars over the loan term then why wouldn’t they? Especially if all it took was a visit to a reputable broker who didn’t charge customers for their residential loan services," she said.

"As one of life’s biggest financial commitments, a mortgage is a debt that should be managed carefully, not simply maintained – as tempting as that may be. For example, switching to a mortgage with an interest rate 25 basis points lower, from a $300,000 loan over 30 years at 5.5%, would mean a saving of approximately $47 per month and a total saving of approximately $16,920 over the loan term. Of course, costs involved with switching also need to be taken into consideration.

"If that borrower continued to pay the 25 basis points extra over 30 years, they would save approximately $41,180 in total interest and two years off the loan term.

"This is one reason why it is a sensible decision for borrowers to visit a reputable mortgage broker who can take a look at their mortgage situation and compare it to a wide range of lenders’ products on the market. They could be missing out on a better deal."