How to Beat Interest Rate Rises This Year
There are some aspects of property where you have some control, while some factors are completely out of your hands.
When it comes to the interest rate you pay on a loan, you’re at the mercy of the Reserve Bank of Australia.
Or so it seems.
In the event that interest rates rise in the coming year, as forecasted by many experts, how can you be ready to meet the extra expense?
Here are some some helpful tips that will keep you ahead of the interest game in 2018.
Is Refinancing Right For You?
Refinancing this year could be your ticket to some lower interest rates.
One perk of refinancing is that you could get the option to choose a fixed rate loan. This is a great protection in the event that rates shoot up over the course of time. But you could also shoot yourself in the foot by having to pay that fixed amount even when rates drop.
There are pros and cons though so be sure to talk to an expert mortgage broker.
Don't Just Pay Up, Pay Over!
As long as your loan isn’t fixed, look into the possibility of making over-payments on your loan.
By doing so you can:
– Shorten your loan term
– Keep your rate a bit lower even if the rates rise all over the country
– Save money
For example, you could start paying the equivalent of a higher rate now. You’ll be getting ahead now and if the rate really does go up that much, it won’t be such a blow to your bank account.
Set Up An Offset Account
Some loan structures let you link another account to your mortgage. You get to keep using the account as normal, but when it comes time to pay out interest, the amount in your bank offsets the total you need to pay interest on.
For example, a $50,000 dollar loan would be offset by the $5,000 you may have in your bank. The interest on $45,000 is less than that on $50,000.
Still Loan Shopping?
Before you snatch up the first plump loan that’s put on the table before you, make sure you’re ready to handle all associated costs. This includes expenses that will surely come if interest rates rise.
Even if you qualify for a large loan, remember that the less you borrow, the less you’ll have to pay interest on. Save up as large of a deposit as possible before you choose a loan.
Crunch some numbers, get professional advice and stay open to flexible loan options, like split loans.
Do Potential Interest Rate Rises Have Your Palms Sweating?
If so, there’s no need to let anxiety hinder your financial goals for this year. Contact our team at Funding Options and prepare and stay ahead of the interest rate game.
– Dom Cassisi, Managing Director