Rising Interest Rates and the Best Strategies to Manage This
Whilst Australians have enjoyed a period of low home loan interest rates over the past decade, with inflation surging to levels not seen since the early 2000s, the Reserve Bank has intervened, taking aggressive steps to increase the official cash rate and curb rising costs of living.
What this means for those with mortgages is that home loan interest rates are on the rise for the first time since 2010 and the correlating effect is that home loan repayments are also increasing, reducing cash flow and impacting the ability to meet other rising costs of living.
To combat this, it is an important time for borrowers to review their existing home loan arrangements to ensure they are getting the best possible deal and that their repayments remain manageable.
As a Mortgage Broker with over 25 years of experience in the Financial Services Industry, I take a holistic approach by gaining a strong understanding of my client’s lending needs, to ensure that any lending recommendations I make not only provide them with a competitive interest rate but, just as importantly, ensure that their lending is structured correctly to meet these needs, as Lender fees and charges are also an important factor in ensuring a competitive deal is obtained.
Rising interest rates, strategies that I consider:
- Asking their existing Lender if they are prepared to offer a better interest rate discount to retain my clients business? How does this compare to similar offerings from competitors and is there a financial benefit to refinancing to another Lender?
- Is a packaged home loan including an offset facility the best option for my clients based on their circumstances or is a basic home loan more suitable? Most Lenders charge a package fee and higher interest rate for a home loan with a linked offset account and to a package home loan is suitable I discuss with clients their current savings, cash flow and to see if there are any expected changes in their financial circumstances, to ensure it is of financial benefit for them under home loan package or whether an alternate loan product is more suitable.
- Is a variable, fixed or split loan facility more suited to my client’s individual needs and circumstances?
- If clients have other personal debts such as personal loans, car finance or credit cards, would it be more cost-effective and financially appropriate to consolidate these debts into their home loan? I provide projections around their debt consolidation to show how this may improve their cash flow position, providing a financial buffer in these uncertain times, as well as saving on higher interest charges.
Like other providers, it is important to shop around for the best deal and engaging an experienced Mortgage Broker to review your options will save you precious time. They have access to a large and diverse panel of Lenders with a broad range of lending products to accommodate your individual circumstances.
If you would like to work with an experienced Mortgage Broker who is focused on both identifying and achieving your lending needs, let me do the hard work for you by approaching your existing lender to see if they are prepared to offer a reduction in your home loan interest rate by clicking the link below. It will cost you nothing but will save you time and may save you money.