Over the last few months the big four banks have on two separate occasions increased interest rates on owner
occupier loans independently of the Reserve Bank, with many non-major lending institutions following suit. As a
result, many Australians are now facing increased mortgage repayments. Indeed, with home loan rates at
historic lows, over the next few years it’s likely that the only way is up! There are three steps you can take to
prepare for higher rates:
Do the Sums
The first and most obvious step is to work out how much your additional repayments will be (generally
speaking, the larger the mortgage, the greater the repayment increase). Your mortgage broker can do the
sums for you, or you can use your bank’s online repayment calculator.
Update Your Budget
There’s little point calculating your new repayments if you don’t apply it to your household Budget. Having
done so, if you find that you cannot comfortably meet your revised repayments you may need to reduce some
non-essential expenses within your Budget such as entertainment etc.
Assess Your Options
This may involve fixing your interest rates or refinancing. This will require much research and can
involve quite complex calculations. Again consult your mortgage broker – they can do all the legwork for you,
and then furnish you with the relevant information so you can make an informed decision.