Continued rises in food prices, utility bills, interest rates and other living costs will have a considerable impact on the budgeting efforts of home loaners.
Here are some tips to help borrowers cope with increased expenses and make the most of their mortgage:
Review your products
Financial circumstances and lifestyles change. Consider how competitive your interest rate is, what features you’re paying for and aren’t using or don’t have and need, fees you’re forking out and the cost vs. benefit equation for refinancing.
Work a better mortgage
Are you throwing lump sums into the loan account e.g. your tax return, bonus or leftover wage? Every cent counts in helping to reduce interest owed and the loan term. Plus, contributing more when you can helps build a financial buffer for times of need.
Raise your rate
Are you repaying your mortgage as though its interest rate was at least 2% higher, in preparation for rate rises and unexpected financial changes? This encourages a good savings habit and makes adjusting to increased living costs and interest rates less burdensome.
Consider strategies such as extending your loan term or debt consolidation. Keep in mind this will stretch your debt over a longer period, attracting interest with every extra month. Weigh up the financial and emotional advantages and disadvantages beforehand.
Log your spend
Are you spending more unnecessary money on transport, entertainment, takeaways and other luxuries? Continually list your expenses to discover savings. Once you’ve revisited all of the above steps, re-do your budget so you really are making your way through your mortgage with confidence.