Refinance your loan or keep paying through retirement?

Two main topics hit the New Year mortgage news this week, one of which was downright depressing but fortunately the other gave me a hint of optimism about our home loan. Perhaps I’ll need a New Year’s resolution or two to be able to make the most out of the alternatives to my current mortgage.

Anyway, let’s start with the bad news: one report out this week suggested that a huge proportion of Australians will still be paying off their mortgage after they’ve retired. Almost half – 49 per cent, to be precise – of the Australians surveyed said they would need to continue paying their mortgage after the age of sixty, an age when many of us hope to be able to retire. Perhaps this survey shows that less of us will be able to – and the comment of the survey sponsor, RaboDirect, was that this statistic could be improved if people informed themselves better about their financial situation and various alternatives.

Which leads nicely into the good news: already last year we were frequently talking about moving mortgages to other lenders, and another survey has suggested that 2011 will be “the year of moving mortgages”. The suggestion is that Australians with an average $300,000 home loan could save about $3,000 a year by switching, but most people don’t get around to investigating the alternatives available to them.

The same survey, run by a mortgage broking company, suggested that 2011 would see more investors in the market and less first home buyers, with few government incentives continuing to be available. In fact, almost half of those surveys believed that investors would make up the strongest segment of the market, with the majority of the rest agreeing that residential buyers (but not first home buyers) would be active in looking for mortgages.