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How to beat interest rate rises

10 May 2010
How to beat interest rate rises by saving money in the household budget

Put your household expenses under the microscope

With Reserve Bank increases in interest rates, paying the mortgage has become a real struggle for some. Here’s some advice for home owners on how to ease mortgage pain.

  1. Don’t panic. Stay calm by focusing on finding ways to make things better.
  2. Make sure you know what the mortgage rate changes mean to you.
  3. Plan a household budget. Keep it realistic so you can stick to it.
  4. Find ways to reduce your expenses – pack your own lunch, cut out that extra café latte. Give up expensive junk food and takeaways.
  5. Review your credit cards and how you use them. You can reduce your interest to zero if you pay the full amount due each month. Compare annual fees and make a change to a cheaper option.
  6. Talk to your lender. There may be ways to reduce payments or interest paid.
  7. Get rid of the temptation to spend by cancelling your redraw facility if you have one.
  8. Plan strategies that will see you through the interest rate rises: develop a more simple lifestyle that is less expensive.
  9. Be decisive and take action. Don’t worry but do something positive. It will make you feel better and will help the situation too.
  10. Do something practical. Put a moratorium on buying new clothes for 12 months. Eat at home rather than going out. If you go out, go on a picnic or choose a byo café or restaurant.
  11. With all the money you save to meet the interest rises, you might find even more to help reduce the principal so you pay off your loan quicker.

Related topic

Getting a mortgage