Interest Rates Rise Action Plan

Interest Rate change Action Plan - What Should I Do?

Interest rates are constantly fluctuating and it is sometimes difficult to know how to make the most out of the current situation. Each time the rate shifts by .25%, there is an $18 dollar difference in your loan repayments for every $100,000 in outstanding borrowings on your mortgage. While it is nice to know these numbers, find out the facts here and what you can realistically do to bring your mortgage under control.

When Rates Go Down - Don't Change Your Repayments

The first temptation when rates go down is to spend the money you have saved. For most Australians, we are talking about $45 per month for every $300,000 in mortgage repayments. If you can manage to keep paying your loan at the higher repayment amount, you will literally shave thousands of dollars and years of repayments off your mortgage. Use the handy X Inc budgeting calculator to help you.

It is a good idea to work through your position with your mortgage broker so that you fully understand where you stand and to ensure that you are using the right home loan for your situation. Even with less lenders around, there are still many options available to you including cash flow management loans, interest only loans, fixed interest loans and much more.

How Can I Get a Better Rate or deal? Investigate Your options

There are as many many ways to reduce your repayments or overall mortgage. If you want to do some research of your own, there is extensive information on this site. Some great options and a good place to start is 12 tips that really work to pay off a loan faster. You could well be paying higher interest rates than you need to. Talk to your lender or get a confidential assessment of your situation from a mortgage broker. Their service is free and they can assess your loans against their major banks and secure lenders and tell you how it stacks up.

Interest Rates may be Negotiable

There is no such thing as a 'standard' interest rate. Different lenders offer different rates, dependent upon how much you have borrowed, how much deposit you paid and what your loan is for. Many people don't negotiate their interest rate because they either aren't aware that they can or don't know how to. If you can, always talk to a mortgage broker when you are buying a property or refinancing.

More Information or assistance

Good mortgage brokers know the range of loan products, structures and fees in the market and can help you decide which one is right for you. Send us the form below or call at any time on 13 XINC (International direct line: +61 2 9018 8417) and we will have a broker in contact with you within 2 business hours.

Consolidate your Debts NOW to bring down your repayments!

One way to bring down your monthly loans payments is to consolidate your debt. If you have several different loans or credit cards, all are debts. Getting them are under control and keeping them that way by using a disciplined payment strategy is what you should be targeting. Usually these debts can be consolidated against your mortgage and you will probably be surprised at just how much you will save. BUT mortgage secured debt does mean you could lose your home if you don't make your repayments, so make sure you are fully aware of the implications of debt consolidation and the need to manage it before you go ahead.

In addition, mortgage consolidation increases the time factor in paying off smaller debts. For example, if you had a $5,000 personal loan, consolidating this to the home will put it on a 30 year term. A mortgage broker can help you work out what you need to repay so that, for example, a 5 year car loan doesn't become a 30 year car loan.

When you talk to your lender or mortgage broker, make sure you get them to analyse your entire debt situation when considering your next move. For more information on debt consolidation, read our reports for the pros and cons.

Should I Refinance?

Refinancing can be expensive so do the math with your mortgage broker first. Often even the saving of a lower interest rate is not enough to warrant changing lenders. Basic maths is still the best guide as to whether a move to another lender is worth the expense.

Assess your situation confidentially with a professional

Assessing your options thoroughly with someone who understands the refinancing market as well as the pros and cons of consolidation, like a mortgage broker is important. Banks and lenders are competing fiercely for the refinancing market and with so many different options available from so many different lenders, finding the right products for your unique situation is best assessed by a professional with access to many different types of loans. A good mortgage broker will also have loans assessment software and they will be able to use this technology to do the sums for you, so talk to a local mortgage broker.