Interest rates have remained at historically low levels for a few years now as a result of the pandemic. Now, it is starting to become clear that interest rates are on the way up!
With fixed rates already experiencing increases and variable rates expected to follow shortly, what should you consider to make sure you are prepared? Here are our top tips:
1. Increase your loan repayments now and save!
One of the best things you can do to prepare yourself for rising interest rates is making the most out of favourable circumstances in the market now. Increasing your loan repayments, saving money and making use of loan features such as offset accounts, will enable you to limit your exposure once interest rates do increase.
By working with your Rise High Broker, you can assess these opportunities to identify the best course of action, and contemplate what repayments may look like once rate hikes do occur. By taking action today and looking well into the future, our team can support you to develop a plan, make incremental adjustments and be prepared.
Lifting your repayment levels now can ensure they don’t become a burden once rate increases actually occur. Keeping a savings buffer equivalent to 3 to 6 months of your living expenses, can moreover be of great support to keep your peace of mind during this time of transition.
Having a buffer will allow you to rest assured that a backup plan is available to protect you against the unexpected. Often, this will provide you with enough clarity to make the wisest decisions and navigate the situation calmly.
We understand that a big part of being prepared, is making sure your current quality of life will not suffer regardless of changes in the market. We are here to support you so your current lifestyle does not have to suffer the consequences of rising interest rates!
2. Explore current fixed rates in the market
Have you reviewed your current home loan or property investment loan against others recently? Fixed rates still remain at normal time lows, but they have been creeping up during the past couple of weeks!
Taking some time now to explore fixed rate options available can allow you to secure competitive and consistent repayments you can budget for. Rather than seeking to out predict the market, have a look at current fixed rates so you find a competitive one, have certainty around your repayments for a fixed term, and can plan around them.
Whilst many economists have shared their forecasts and predictions, the reality is there is no certainty around how quickly rates will rise and at what pace. With so many factors affecting this decisions, the market really becomes unpredictable.
At this stage, the only certainty we have is: rates will rise!
With this in mind, if you are looking to have certainty around your repayments for a certain period of time, fixed rates are the perfect solution. You will want to speak with your broker as soon as possible, to avoid missing out before rates increase much more!
3. Look into your current debt and consolidate or refinance
Credit cards, personal loans, car loans, Afterpay and other forms of short-term debt all come with extremely hefty interest rates! Taking a closer look into them and considering consolidation or refinancing can make a world of difference when it comes to your savings!
When we look into what long term average interest rates in Australia used to be (roughly between 6-8%), and compare them with today’s current rates (below 2-3%), there is still a high chance that by looking into these options, you are likely to save a lot of money in the long term.
By consolidating your debts, you are also taking care of your cashflow. Enabling you to alleviate the pressure and allocate a greater budget into your mortgage repayments.
4. Speak with your Rise High Broker early!
Whether you are just feeling anxious, would like answers to your home loan or investment property loan questions or just want to develop a plan to get ahead financially, it is never too early to reach out!
We are here to help you and would love to have these conversations early so you can feel secure.
Having the advice of a trusted professional who has your best interest at heart makes all the difference when navigating an uncertain situation!
If you are looking for personalised advice for your specific situation, reach out to our team today. We are always here to help and support you!