November 20, 2022 Leigh Deledio

Okay, we get it. Interest rates are going up. What can you do about it?

By Leigh Deledio.

There’s been a lot of talk about interest rates increasing. I should know, I have written about it a few times.

While it’s great that there are plenty of communication channels talking about rate increases to keep everybody updated, I couldn’t help but notice that all this talk around rate increases was doing more harm than good.

Don’t get me wrong, it’s important to keep yourself updated with the latest news, especially when it affects your mortgage repayments. However, a lot of the news around interest rates can be alarmist.

 

Okay, we get it. Interest rates are rising. Is there anything you can do about it?

As a matter of fact, there is.

Not long after the first rate hike was announced, Commonwealth Bank published a research about Australian homeowners who were already taking steps to mitigate the impact of rising mortgage rates (Good on you, mates!).

According to the research, more than 90 per cent of the respondents had taken steps to lessen the impact of rate hikes:

  • Nearly half (47 per cent) reviewed and reduced their living expenses.
  • 42 per cent started building up their savings.
  • 3 out of 4 started making additional repayments on their home loan.
  • 37 per cent started putting money into their offset/redraw account.
  • 33 per cent started looking for cheaper providers for utilities/services.

 

Review your budget

If you don’t know where to start, the very first item on your list is to audit your finances. Start by looking back at your previous bank statements and then set out a budget. If you already have a budget, it’s time to pinpoint areas for improvement. Can you cut back on spending in certain areas?

Don’t have a budget template? Download our budget template here.

 

Review your home loan

The second item on your to-do list is to review your loan to make sure your current loan is still the right one for you.

Does your current loan have an offset account so you can save on interest? Do they let you make extra repayments to shorten your loan? Can you split your repayments into fixed-rate and variable-rate components?

If you’re not getting the best bang for your buck, it’s time to look for a better deal. First, work out what features of your current loan you want to keep. If you are eligible to refinance your mortgage and find a lower rate, start comparing the interest rates on similar loans. You might also be able to access cashback deals when you refinance.

 

Here for you

If you are concerned about your interest rates, speaking to an expert is always helpful. Our mortgage brokers can help outline your options. Book a free chat today.

 

This article was published by My Coastal Home.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced, or republished without prior written consent.

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Leigh Deledio
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