Author: Sal Cinque, CEO, TAG Finance & Loans
As you well know, interest rates are rising. As a result, home loan rates are also on the rise.
So, what should you do in response? Here are our five suggestions:
1. Don’t panic
Your lender wouldn’t have approved your home loan unless they were satisfied you could meet your repayments after a series of rate rises. Banks accomplish this by accessing your repayments at a much higher interest rate – approx. 3% higher than the advertised rate.
2. Get ahead of any problems
If you think you might struggle to meet your repayments, contact your lender to discuss your options. It’s important you make contact prior to any hardship because the more notice you provide your lender, the more flexible they’re likely to be.
3. Budget for rate rises
Assume your mortgage rate will rise by 2 percentage points. Calculate what your new monthly repayment would be and start paying it now. You could pay the additional amount directly into the loan, an offset account or a savings account.
4. Improve your savings rate
Look for ways to reduce your expenses and how you may increase your income.
5. Switch to a better loan
The home loan market is intensely competitive, which is one of the reasons lenders offer new borrowers lower interest rates than loyal customers. You could potentially achieve significant savings by refinancing to a lender and may qualify to receive a cashback of up $4,000 for doing so.
TAG Finance and Loans
Sal Cinque | CEO
03 9886 0800 | loans@tagfinancial.com.au
Disclaimer: The information contained on this page is general in nature. Professional advice should be sought before acting on any aspect on this page. TAG Finance and Loans Pty Ltd ABN 25 609 906 863 Credit Representative Number 483873 National Mortgage Brokers Pty Ltd ABN 88 093 874 376 Australian Credit License 391209.