A proactive approach to managing your mortgage can help steer you through a tough environment.
With the price of the average home beyond reach, petrol prices and inflation rising, most would-be home buyers feel like the odds are stacked against them when it comes to purchasing a home.
But despite these obstacles, buying your first home or investment property is still possible. All it takes is a little time, mortgage know-how and the commitment to managing your finances.
So what does this mean for you and your mortgage? There are a range of different mortgages now available from numerous lenders; through switching products to better suit your financial situation you could potentially save thousands of dollars in interest repayments and take years off the life of your loan.
For example, you may want to switch to a lower variable-rate mortgage with fewer features, or lock into a fixed-rate mortgage where you've got certainty in repayments each month. Breaking the terms of your current mortgage can be expensive however, so you'll need to check that you'll come out ahead when all costs are considered.
Moreover, if you have other debts that are impacting on your ability to meet your mortgage commitments, you may even consider consolidating all your debts into one easy monthly repayment.
Consolidating debts, such as credit cards or personal loans, into your home loan will not only let you pay off your debt at potentially low interest rates, it can also help improve your cash flow.
And cash flow is an important consideration when it comes to your mortgage. While it can be a very effective strategy, refinancing your home loan is not the only option that's available.
A number of simple yet proven tactics can help you safeguard against significant changes to your financial situation, including rising mortgage repayments as a result of an interest rate hike:
•Set a budget: Work out your expenses, fortnightly or monthly, and factor in your mortgage repayments. You might need to cut back on spending in places to make sure your mortgage is a priority. Keep a diary of your spending and stick to your budget.
•Cut your debt: Reduce the number of credit cards you have (ideally down to one) and their credit limits, and only use them sparingly. Having a mortgage means taking control of your spending.
•Pay more than the minimum: Switch to fortnightly repayments - an easy and effective way to pay an additional month's repayment over the course of the year. And when extra funds come your way, like tax refunds, put them straight into your home loan as well - it can really make a difference in the long-term.
•Direct debit: Arrange for your mortgage repayments to be direct debited from your pay, so you always make them on time.
Remember, if you feel you're struggling to meet mortgage commitments it's best to act now, rather than let the problem spiral out of control. Speak with your mortgage broker today to explore how you can better manage your mortgage in a rising rate environment.
If you're keen to learn more tools and strategies for financing and buying your home, we have launched a separate section on our web site
http://www.ifin.net.au called Tools & Tips.
This section is packed with practical advice, helpful checklists plus a host of valuable information that's essential to successful property buying.
With the help of Informed Financial Services Mortgage Consultant you can equip yourself to navigate the whole process of purchasing your next home - from researching and financing right through to purchase and settlement.
To discuss your mortgage options, call Marino from Informed Financial Services on 0416 083 281 today.
Informed Financial Services
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