Another interest rate rise. Just what nobody ordered.
On November 3rd, the RBA increased the cash rate by another 0.25 percentage points to 4.85%, the fifth increase this year! And with Christmas approaching and household budgets already feeling the squeeze, we know this news will be unwelcome in plenty of homes.
If your first thought was, 'How much more are we supposed to stretch?',
we hear you.
We can’t change the RBA’s decision, but we can help you understand where your mortgage sits and explore what could make things a little more manageable.
Here’s where we’d start.
1. Give your home loan a check-up
Having a home loan already doesn’t mean you have to leave it on autopilot.
We can review your current rate, ask your lender whether there’s room to improve it and compare suitable alternatives.
Sometimes there may be an opportunity to negotiate with your existing lender. Sometimes switching could be worth exploring. Either way, we’ll look at the numbers, including any fees and costs, before recommending a change.
And we’ll check the loan term too. Starting a fresh 30 year loan might lower repayments, but stretching the debt out could mean paying more interest overall.
2. Find out what the increase actually means for you
The headlines tell you what the RBA has done. They don’t tell you exactly what’s happening with your loan.
Check your lender’s notification for your new rate, repayment amount and when any changes take effect. If you’re making repayments through a scheduled transfer, check whether you need to update it.
Already paying above the minimum? Let’s check whether your existing payment still covers the new required amount.
Knowing the actual figure gives you something concrete to plan around and we’re happy to help you work it out. Numbers is what we're good at!
3. Check your offset is doing its job
If your loan has an offset account, make sure it’s linked correctly and you understand how it works.
With a 100% offset, a $500,000 loan and $20,000 in the linked account means interest is calculated on $480,000.
Keeping money for upcoming bills in your offset until it’s needed may help reduce interest along the way. However, an offset generally won’t reduce your required repayment and its benefits need to outweigh any extra rates or fees.
Not sure yours is set up properly? We can help you check.
4. Give your household expenses a refresh
Before deciding there’s nothing left to cut, take a fresh look at
the bills quietly ticking away.
An unused subscription. A phone plan that no longer suits.
An energy deal you haven’t checked in years.
There may be opportunities to free up a little cash without
overhauling your whole life.
With Christmas around the corner, it can also help to set a spending limit now, while there’s still time to plan.
And if you’ve already trimmed everything you reasonably can, we understand. That’s a reason to reach out to your broker for support.
5. If repayments are becoming difficult, speak up early
You don’t need to wait until you’ve missed a repayment to ask for help.
You can contact us. We can help you understand your loan and
where to start the conversation.
No judgement. No embarrassment. Just a conversation about what’s
happening and what help may be available.
We’re still your Broker Girls, long after settlement.
Whether we helped you into your home recently or years ago, you can still pick up the phone and say, “Girls, can you please check this out for us?”
Our services are completely free and we’re here to help you understand your options.
Reply to this email or book a Lattes & Loans chat. Let’s look at your numbers together.
With love,
Your Two Broker Girls team
