Even in the face of a 13th increase in the official cash rate on Melbourne Cup Day, Craig Betalli, Senior Broker at Finance Specialist Our Broker, insists that Aussie homeowners shouldn’t give up “without a fight”, and the guidance of an experienced broker can provide them with a ‘rails run’ towards financial security.
According to research from the comparison website Finder, with the official cash rate now at 4.35%, Australians with a $590,000 mortgage are feeling the financial pinch. These homeowners are now shelling out approximately $1,345 more per month than in April last year, just before the Reserve Bank started its unprecedented rate hikes.
The ripple effect of these interest rate hikes is evident, and it raises the critical question: What can Aussies do to manage this extra burden on their finances?
Craig Betalli sheds light on potential strategies to navigate these challenging times. “That’s a considerable amount of extra money to be spending on your mortgage, especially when the cost of almost everything else is also going up,” he said. “But in the face of rising costs, there are practical steps that homeowners can take to manage the strain on their finances.”
Take the fight to interest rates
One of the first pieces of advice, though not the most festive with the holiday season fast approaching, is to revisit budgeting. Craig acknowledges the reluctance, saying, “We don’t want to talk about budgeting at Christmas. That’s no fun.”
“However, understanding where your money is coming from, and your expenses is a fundamental step toward the fight against minimising the impact of higher interest rates.”
Beyond budgeting, homeowners may need to explore additional avenues to supplement their income. Craig suggests, “People can find extra cash flow by taking on extra hours at work or cutting back on expenses.
“This might involve selling unnecessary assets, such as boats or second and third cars, and decluttering their lives to help regulate spending.”
Refinancing and seeking assistance
In cases where non-mortgage debts become overwhelming, Craig suggests exploring strategies such as refinancing the car or boat debt into a home loan. “While some caution against funding short-term assets with long-term debt, a refinance provides for potential financial flexibility as long as some brakes are applied to unnecessary spending,” he advised.
Craig Betalli underscores the importance of seeking assistance promptly if handling debts becomes overwhelming. He also highlights the significant role a financial specialist, such as Our Broker, can play in such circumstances. “Brokers can provide borrowers with broader advice spanning various lenders and potentially secure a more cost-effective interest rate.”
On the flip side, if negotiating repayment arrangements directly with a lender is not executed correctly, it may adversely affect the borrower’s credit score.
“Brokers play a vital role in clarifying the terms of repayment arrangements and mitigating the potential impact on credit scores.”
If you want an obligation-free mortgage health check, contact Our Broker today on 1800 913 677.