As the great physicist, Sir Isaac Newton said, “What goes up, must come down.” However, when it comes to interest rates, the reverse is also true. Because we all know that Australia’s historically low rates cannot stay that way forever, and must begin to rise in the not too distant future. And even though there are mixed opinions amongst the experts on when the rate rise will occur, most agree that is only a matter of time before this happens. Which means at least one rate rise, if not more, is predicted in 2018.
7 Things to Do Before a Rate Rise
- Contact Your Mortgage Broker – Having a conversation with your broker is vital to keeping yourself informed and up to date with what’s currently available in the marketplace. Because new, improved loan products are continually being released and your broker can recommend the best product for your specific situation.
- Check Your Position – Once you understand what’s available, you can go to work and check your current financial position. Use our handy online Mortgage Calculator to run different interest rates and repayment levels to see how a rate rise could affect you.
- Consider Your Options – Ask yourself, “What would be the best scenario for my circumstances and what do I want to achieve for the future?” By being clear on the various choices available to you, you will make better decisions for the long term.
- Refinancing – Are you able to refinance your current loan or perhaps you may wish to fix your interest rate at the current low level for a period of time? Each has their potential benefits, but you must choose the best option for your situation. Ask your broker how.
- Budget, Budget, Budget- Create a budget and stick to it. This means being mindful of your money, cutting costs, spending less and living within your means. By doing so you won’t be over extended and financially stressed when rates do go up.
- Pay Your Mortgage Down – By paying your loan down faster with extra payments or by depositing lump sums, you can save money now and have your mortgage paid off years sooner. Plus when rates do rise, you’ll already be ahead of the curve with less to pay off in the future.
- Pay at the Higher Rate – Try paying off your loan as if you already had the higher interest rate on your loan. This means you’ll be paying off more each month and will be comfortable with the new amount when the rate rise occurs…because it will.
Until next time, stay prepared!
Budgets…we all know that we need them, yet many of us avoid them like the plague. In fact, most of us will do pretty much anything else but sit down and take the time required to create and manage our own budget.
But when you stop to think about it, organising and managing our finances is an essential part of life. And the paradox is that if we don’t take control and manage our money ourselves, it will be our finances, or lack of them, which dictate to us what we can or can’t do in life. So our money starts to control us! That’s not a great strategy when you are looking at purchasing your own home, refinancing or investing.
So the question has to be asked, “Why do we choose to ignore the important area of budgeting?”
From experience it seems that the answer lies in how we perceive budgets and how they work. Because, let’s face it, spending is seen as fun and sexy, whilst budgets are boring and restrictive. However, there is nothing fun and sexy about not being able to pay our bills, save for our dreams and create the life we aspire to. On the other hand, with a good budget, focus and persistence, we can achieve our financial goals and live a life we love.
So my message to you is to organise your own budget sooner rather than later…you’ll be glad you did.
For some great budgeting tips, check out my previous blog on the subject here. Alternatively, call us and speak to one of our professional mortgage brokers, we’re here to help.
When it comes to financing the purchase of your property or refinancing your current loan… the simple truth is your numbers count. So it is very important that you get to know your numbers before applying for your loan. And the best place to start with this process is by using the humble Mortgage Calculator.
Why? Because to use one of these super handy little mathematical geniuses you’ll need to get very clear on your particular set of numbers. These include the following variables:
Total Transaction Amount- This is the total dollar amount required to cover your property purchase and includes the agreed price of your property, stamp duty (if applicable) and any other associated in costs.
Deposit Amount- This is the total amount of cash funds and savings you have available to put towards your purchase.
Loan Interest Rate- This is your estimated % interest rate for the loan. Your mortgage broker will help you get the best rate possible for your circumstances.
Term of the Loan- This is the period of time over which you will repay your loan. This can range from 5 to 30 years, depending upon your situation.
Payment Period- When do you intend to make your loan repayments? Do you prefer weekly, fortnightly or monthly repayment cycles?
Repayments- This is the dollar figure of your regular minimum repayment amount and will be determined by your other numbers. Call us to calculate this for you.
Feel free to call us at Mortgage Coach and speak to one of our professional mortgage brokers to help answer your questions.
Until next time, here’s to knowing your numbers.
You should always take into consideration your personal circumstances as mortgage calculators do not take into consideration fees and service charges and any changes that may happen during the period of the loan. They should only ever be used as a guide.
Are you looking to buy your first home?
New housing finance figures released by the Australian Bureau of Statistics (ABS) reveal first home buyers are returning to the market, according to the Real Estate Institute of Australia (REIA).
REIA President Malcolm Gunning said the proportion of first home buyers in the market (as part of the total owner-occupied housing finance commitments) had increased to 15 per cent in June, which was the highest it had been since February 2014.
“The number of first home buyer commitments increased by 1.6 per cent for the month, following a 28.9 per cent increase the previous month and is the highest since October 2014,” Mr Gunning said.
Investor housing commitments
The ABS data also revealed investor housing commitments had trended down in June.
“The value of investment housing commitments decreased by 0.9 per cent in June in trend terms following falls in the previous two months, and is well down from its 2015 peak,” Mr Gunning said.
“Overall the figures for June 2017 show the number of owner-occupied finance commitments decreased by 0.2 per cent. If refinancing is excluded, in trend terms, the number of owner-occupied finance commitments increased by 0.3 per cent and is the tenth consecutive month of increases.”
Established dwelling purchase commitments
The number of established dwellings purchase commitments decreased by 0.5 per cent in June, while new dwelling construction increased by 1.9 per cent and the purchase of new dwellings increased by 1.3 per cent.
“The June figures show that the market is adjusting with owner occupiers and first home buyers returning to the market as investor activity decreases in response to the actions of the regulators and banks to limit bank lending to dampen investor demand for property,” Mr Gunning concluded.
Good luck getting into the market with your first home. We are here to help.