Many Australians are feeling the squeeze from the RBA interest rate rises. As a homeowner, it’s important to be proactive and implement strategies to minimize the effects of rising interest rates. In this blog post, we will discuss some practical tips that can help you reduce the impact of interest rate increases and manage your home loan more effectively.
Review Your Budget:
One of the first steps in mitigating the impact of interest rate increases is to review your budget. Take a close look at your income, expenses, and debts. Identify areas where you can cut back or make adjustments to reduce expenses. By doing so, you can free up additional funds that can be allocated towards higher mortgage repayments.
Get in contact with your broker to negotiate with your lender:
Getting your broker to engaging with your lender can be beneficial when facing interest rate hikes. Seeking the assistance of a mortgage broker can help you negotiate a better rate and lower interest rate from your lender. If you are transitioning from a fixed rate, you may find yourself rolling onto a higher variable interest rate.
Refinance To a Lower Interest Rate:
If your current lender is unwilling to offer competitive interest rates, it may be worth exploring other lenders who can provide better terms. Refinancing your home loan can help you secure a lower interest rate, resulting in more affordable monthly repayments. Additionally, refinancing presents an opportunity to consolidate debts or access equity in your home, providing greater financial flexibility.
Make Extra Repayments If You Can:
Making extra repayments towards your home loan can have a significant impact on reducing the overall interest charged and shortening the loan term. By paying more than the minimum required amount whenever possible, you can lower your principal more quickly. This not only saves you money in interest but also helps you become mortgage-free faster.
Extend the Loan Term:
If you’re struggling to meet your current monthly payments, extending the loan term can be a viable option. By spreading the cost of the loan over a longer period, you can reduce the immediate financial burden. However, keep in mind that opting for a longer loan term means paying more interest over the life of the loan. Consider this trade-off carefully before making a decision.
Leverage Home Loan Features:
Take advantage of home loan features like an offset account or redraw facility. An offset account allows you to offset your loan balance against your savings, reducing the amount of interest charged on your loan. Similarly, a redraw facility enables you to access any extra repayments you’ve made on your loan, providing you with greater financial flexibility when needed.
Fix Your Home Loan:
Consider fixing your home loan as a strategy to manage rising interest rates. By locking in a fixed interest rate, you can protect yourself from future rate hikes and potentially save money on your mortgage repayments. This provides stability and peace of mind, knowing that your repayments won’t fluctuate with interest rate changes.
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Get in touch with our team of expert brokers today to determine which method is the best option for you!
