How to get on top of your home loan before rates rise

With speculation rising about higher interest rates, now’s the time to get on top of your home loan.
Current interest rates are at record lows in Australia – and that means there’s plenty of scope for an interest rate rise. In fact, worries about possible future rate hikes are a leading cause of concern among Australian home owners.

With some lenders already increasing rates out of cycle with the Reserve Bank of Australia, it’s worth taking steps to get on top of your home loan today.

Check the rate you’re paying
According to comparison site Mozo, for the average borrower on a $300,000 loan, the difference between the big banks’ rates and some of the most affordable loans can add up to $2,496 a year. Over ten years, that totals $24,960, making a compelling case to review your current rate and think about refinancing to a better value loan.

Consider fixing
Locking into a fixed rate provides protection against rate rises for the full fixed term.

If you’re not comfortable about fixing your entire loan, consider splitting between fixed and variable rate portions.

Make the most of redraw or offset

Put your spare cash to work paying down your loan, and rest assured you can withdraw money when it’s needed through redraw. Or, if you prefer at-call access, an offset account can provide valuable savings.

Round up repayments

Here’s a handy tip to pay your loan down sooner with minimal financial impact. Round up your monthly repayments to the nearest $100. On a $300,000 loan with a rate of 3.74% p.a., rounding the monthly repayments from $1,540 to $1,600 could see you save almost $11,000 in overall interest costs and cut up to 18 months off the time taken to become mortgage-free .

Current interest rates won’t stay low forever. Taking action now could see you forge ahead financially – free from concerns about rising rates.

This content was brought to you by ME Bank for more information visit mebank.com.au

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