- Interest rates are rising – you can prepare
- Review your spending now
- Can you improve your current loan structure and rates?
- Call a broker – get the best possible loan for your circumstances
For the first time in a very long time, interest rates are heading up. Fixed rates have been increasing for the past few months and variable interest rates are following.
It’s inevitable – your home loan repayments are going to increase if you have all or a portion of your loan on variable interest rates.
If you have a fixed interest rate, your time will come too – when your rate finishes, the new variable rate may also be higher than anticipated.
What you can do:
- Firstly, start managing your budget now! Review what you are spending.
Are there things you don’t need? A good example is the number of subscriptions you have – and possibly don’t even use! If you can clean up some of your spending habits, it will have positive effects moving forward.
- Secondly, start making higher repayments now to get used to what it will soon be. When rates rise, you will be in a better position to manage the increase. You will also be getting ahead on your home loan which will give you a nice buffer going forward.
- If you have an offset account, you could build the buffer in that account. If your repayments also come from the offset, you’ll have the benefit of having saved for future repayments whilst enjoying the interest saving on the extra funds you’ve deposited.
- Next, review your current home loan. It could be as simple as calling your bank and tell them you are considering your options. Most banks will provide an offer of a reduced rate over the phone. They don’t want to lose your business, but they also want you to make the first move! Even though rates will eventually rise, you will be starting the upward rate journey from a lower base.
- Considering a fixed rate is still a good option. Whilst they’re higher than the variable rate now, that may not be the case in a year’s time. Fixed rates will give you certainty of repayments – you can budget effectively for the term you select.
- Finally – call us. Once you have the best rate your current bank is willing to offer, there may still be better rates available in the market. We know the market and would love to help you with the best rate to suits your personal circumstances.
A non-home loan related suggestion… we are nearing full employment now and it’s tough for employers to find staff. Ask for a pay rise! You never know what you might be offered, and the time has never been better to ask!!