When rates rise, a few simple proven tips can help you keep on top.
A rise in interest rates is an unwelcome announcement to anyone with a mortgage. An increase of a quarter of a percent, for example, means finding around an extra $40 per month for the average mortgage repayment. But can anything be done to mitigate the impact of rising rates? There sure is:
Check your Rate
Start by taking a look at your current interest rate and whether you could be paying less. There are lots of different types of home loans available, with a significant difference in the rates. As a rule of thumb, the more flexible the loan, the higher the rate – so check and see if you’re getting stung for bells and whistles you don’t need.
Line of credit loans, redraw facilities and offset accounts, for instance, generally come at a higher rate. If your loan has features that you’re not using, however, it may be worth switching to a cheaper model. A ‘basic’ or ‘no frills’ loan may not have the flexibility of some of these products, but they could be tens of dollars cheaper each month.
Get help from a professional
New products are hitting the market every month and competition for your business among lenders can be fierce. Your Choice consultant will be able to explore your options, so it’s well worth giving them a call. Should they identify a more appropriate loan to suit your situation, refinancing through them can be quick and easy.
Is it time to fix?
If you’re concerned that rates are going to keep rising, it may be worth looking at fixing your interest rate. With a fixed rate loan you make the same repayment, which can help you with budgeting each month. In a rising market a fixed monthly repayment could also end up lower than the variable rate, however, bear in mind that you’ll be stuck with your fixed rate if interest rates do fall.