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The mortgage repayments of millions of property owners around the country have already begun rising after the most recent rate hikes by the Reserve Bank.

With the official cash rate currently at 0.85% (at the time of writing), banks haven’t hesitated in passing on the increase to borrowers. While it marks the first time in 12 years that we’ve had consecutive increases in the cash rate, mortgage interest rates are still relatively low.

Here’s what investors can do to prepare for future rate rises while interest rates are still low.

Review your home loan

There are still competitive rates to be found, so now is a good time to review your mortgage and compare it against what other lenders are offering. Making the time to speak with a mortgage broker or your current lender about whether your interest rate and loan structure are still right for you can help to make sure you’re in the best position when rates start rising further.

Make enquiries before the fixed-term expires

If you’re on a fixed-rate mortgage, it could be worthwhile chatting with your lender before the fixed term expires to explore your upcoming options. Make sure you know what interest rate the loan will revert to after the fixed-term period expires. You also don’t have to wait for the fixed-term period to expire before you make enquiries with a new lender.

Make extra repayments now

While interest rates are still fairly low, consider making extra repayments into your loan before rates rise even further. You can do this by making more frequent repayments (i.e. fortnightly instead of monthly), or by depositing a lump sum like your tax refund (tax time is coming up fast!).

If you’re currently on a fixed interest rate, it’s important to make sure that your lender hasn’t placed any restrictions on making extra repayments.

Build a buffer

If you have a mortgage offset account, build a buffer for future you by making extra repayments into this account. That money is then ‘offset’ against the balance of your home loan, so you only pay interest on the difference between the loan amount and the amount in your offset account. This means you pay off the loan faster and with less interest.

Refinance

If your current lender’s interest rates are higher than the market average, it could be worth picking up the phone and asking them if they can do a better deal. If they aren’t prepared to do so, you may want to consider refinancing to another lender who is offering a more competitive interest rate. We have some of the lowest rates on investor loans in the market, starting from just 2.74%* p.a. (3.46%* p.a. comparison rate) on our Smart Booster Investor Bundle, which allows you to bundle your investment loan with your home loan on your owner-occupied property. With no monthly or ongoing fees, you could save thousands.

* Rates effective from 22.06.22

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Marie Mortimer is Managing Director of loans.com.au, one of Australia’s largest online lenders. Since Marie started the business in 2011, Marie has grown loans.com.au into a company with $6 billion worth of home and car loans. Marie is dedicated to improving financial literacy for all Australians and is passionate about the FinTech industry in Australia. When she isn’t at work, she loves to spend time with her husband and two young children.

loans.com.au is an online lender for home and car loans. Since 2011, Aussies have trusted our locally based loans.com.au team to support them with low home loan and car loan rates, approved quickly through the online loans.com.au app.


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