Interest rates might not be changing, but that is no reason for homeowners to do nothing to improve their own situation, mortgage brokers advise.
Aussie brokers Scott Adams and Sam Fowler say households are bearing the brunt of rising costs and stubborn interest rates but accepting that their home loan position is static might be costing them in the short and long term.
Here are a few tips Adams and Fowler suggest to regain some control.
– Consolidate debt
By combining high-interest debts such as personal loans or credit cards into their home loan, homeowners can reduce monthly payments and improve their financial health.
“I recently helped a client who had used multiple personal loans to finish and furnish their home”, Adams said.
“By consolidating their debts, we reduced their overall repayments by over $1,000 per month. At a time like this, that immediate relief is amazing for this client, but over the life of the loan it is game-changing money”.
– Top up to create safety net
Building an emergency fund is essential for financial stability. With the average Australian property growing by a whopping 8 per cent over the past 12 months, borrowers could access up to $70k by topping up their home loan.
– Loyalty costs money
Many homeowners are unknowingly overpaying on their mortgage, Fowler believes.
“Borrowers on a 6.4 per cent interest rate could save $2.4k per year by refinancing to a better rate. By checking your interest rate, you could potentially save thousands of dollars over the life of your loan.”
– Extend term for short-term relief
Understanding the long-term implications of your loan gives you options. Adding an extra five years to the term could save thousands in repayments in a year.
“Working through your options with a local expert can free up much-needed cash into your weekly budget”, Fowler says, adding that this option could be part of a refinance transaction, and needs to be considered carefully.
– Identify savings opportunities
Fowler and Adams suggest that the best outcomes are born out of consistent planning and open dialogue with your broker.
“Budget review is a crucial step and creating a clear picture of your income and expenses, you can make informed decisions about where to allocate your money and having an expert in your corner makes an enormous difference”, they concluded.
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