How you structured your home loan(s) some time ago will determine how insulated you are from rising interest rates. If you took on longer term fixes then you are probably sitting pretty right now. But, keep looking forward to when you do come off these nice rates to make sure you can weather the storm once they do roll over. A possible strategy is to increase your payments now to what they may be when you roll – this will speed up the overall repayment of your loan and not be such a financial shock at roll over time
For those who’ve been riding the ‘fix for one year’ train you are steering down the barrel of a nasty increase in your fortnightly or monthly repayments. This is a very uncertain time and many people are not sure about fixing now or later or if they are getting the best deal from their bank.
If you are thinking the same and happen to be rolling onto a new fixed rate in the next few months - plus have had your home loan in place for 3 years of more - you could consider refinancing to a new lender.
By using an expert mortgage broker the benefits of considering this strategy are having a formal review of your financial situation, providing you with options to consider as alternatives to your current lender and a nice juicy cash contribution to help balance out higher interest rates and/or cover legal costs involved (if you refinance).
Some tips to help manage higher interest rates:
- Be very careful with buy-now-pay-later schemes. These have a higher interest rates and larger payments
- Pay off your highest interest rate debt as quickly as you can
- Make a budget and spend within your means
- Consider renting a room out to generate additional income
- As above, consider voluntarily increasing your repayments to smooth out the increase when it does come
- If you can’t afford your mortgage payments put your hand up NOW and immediately contact your bank or expert mortgage adviser. There are options but we can only help if it’s not too late – don’t be the ostrich with your head in the sand.
If in doubt, give me a shout - contact here.