Not feeling confident at the prospect of higher interest rates? You’re not alone, but the good news is that there are ways to lower your mortgage repayments.
Higher cost of living, global volatility, and the ongoing economic impacts of the pandemic certainly kicked the year off with a bang. In addition, we’re now facing interest rate hikes not seen in over two decades. What’s worse is that for almost half of Australians, our savings and financial wellbeing have taken a hit because of it.
New data sourced from NAB indicates that more than 40% of all surveyed adults reported a decline in their savings in the past three months. In addition, the NAB Australian Wellbeing Survey also found that more than one in ten Australians do not have $2,000 for an emergency.
If you’re feeling the pinch of financial stress at the moment, you’re not alone, as the survey also showed that one in three people are currently reporting “high” levels of financial stress. Three quarters of respondents are trying to save, but report being challenged by debt, repayments, bills, and everyday spending. With interest rates only set to increase, a wise preventative measure for homeowners is to get familiar tools to reduce their mortgage repayments.
Five Ways To Lower Your Mortgage Repayments
For prospective buyers and existing homeowners alike, the timing and magnitude of any changes to interest rates will often be closely watched. Even the smallest increase could mean hundreds of dollars more in mortgage repayments per month, so it’s important to have a game plan as a means to protect yourself against these types of rising costs.
As such, lowering your mortgage repayments can be an incredibly effective way to ward off any potential stress linked to your finances, even if it’s only temporary. While some measures may be more appropriate than others and will depend on your financial situation, just a handful of the more common tactics to try include the following.
Get An Offset Account – The basic function of an offset account is to use up to 100% of the balance of a linked transaction account to ‘offset’ – or effectively reduce – the portion of your home loan that is accruing interest. It’s like having a savings account linked to your mortgage, which in turn could significantly lower the amount of interest you due.
Stop Paying Monthly – If you are paying your mortgage monthly, take your salary payment frequency into consideration to match your mortgage repayment cycle. By paying half of the monthly amount every two weeks – or swapping to fortnightly payments – you’ll make the equivalent of an extra month’s repayment each year.
Make Extra Repayments – While it may seem counterproductive if you’re trying to reduce your mortgage repayments, any attempt to get ahead with your home loan will reduce the amount of interest due. Try to get in the habit of making lump sum payments whenever you can, such as utilising your tax return, any surprise bonuses, or even funds sourced from an inheritance.
Consider Fixed Rates – It’s not uncommon for lenders to offer lower rates to entice new customers, but fail to look after their existing customers with the same benefits. Banks are not known for their loyalty, so ensure you know what’s on offer and don’t be afraid to ask for the best possible interest rate structure, even if that means opting for fixed over variable.
Home Loan Health Checks – At least once a year, put aside time to meet with your bank manager or mortgage broker for a loan check up. Your financial position may not be the same as it was twelve months ago, and it’s also a great time to revise your loan terms and interest rates, or if you should swap to another product.
As of September 2021, mortgage brokers wrote 67% of all residential home loans in Australia – the highest number ever recorded. What’s more is that 90% of these customers reported that they were happy with the services provided to them. If you’re thinking about applying for a home loan or need some help with managing your mortgage repayments, then it’s worth getting in touch with the professionals.
Partnering With Home Loan Professionals
Navigating the complex world of home loans has long been regarded as stressful, frustrating and time consuming – but if you can find the right advice on sourcing how mortgages work, then the good news is that it doesn’t have to be.
Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.
If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.