The latest news that all of the big four banks have lifted their interest rates on owner occupier home loans, and a number of non-major banks following suit, will see many Australians will now be facing an increase in mortgage repayments.
This will no doubt impact a lot of household budgets and to help you prepare here are three things you can do;
1. Do the Numbers
First work out how much your additional payments will be. Knowing exactly how much extra you will pay each month and year will help you prepare your budget.
To help you do the sums; you can use our mortgage calculator by inputting your exact mortgage details or speaking with your mortgage broker – they can run the numbers for you.
2. Set a new Budget Plan
There’s not a lot of point of working out how much extra you have to pay on your home loan if you don’t apply it to your household budget.
Write a new budget plan with your new mortgage repayments and assess how comfortably you can meet it. You may find that you are going to struggle financially, so take the time to look for areas where you can save money. It may be necessary to change your spending habits in order to adjust to the increased repayments.
The important thing is to plan straight away to avoid any nasty surprises down the track.
3. Consider your Options
An interest rate rise is something you need to prepare for, do your research and make the right, sometimes difficult choices.
Doing the numbers and setting a plan are two parts of the puzzle but in the end you still need to make your payments.
Have you looked into changing the frequency of your repayments? It might be easier to manage and less of a burden paying weekly or fortnightly repayments rather than monthly – or vice versa.
Maybe you have some savings and are able to make a lump sum payment? A lump sum payment could make a dent in your mortgage and could even help offset an interest rate rise by putting you ahead.
Is refinancing or fixing your interest rate an option? This is probably the hardest question to answer and requires a lot of research.
To get help you make the right choices with the research done for you, my advice would be to see your mortgage broker or let me know and I can put you in touch with my mortgage Guru!