The Reserve Bank has raised the cash rate five times this year, most recently to 4.85% on 3 November. With another decision due on 8 December, many Territorians with a mortgage are asking the same question: what can I do about it?
You can’t control the cash rate, but you can control how well your home loan is working for you. Here are five places to start.
1. Review your home loan
Lenders change their rates over time, and a loan that was competitive when you signed up may not be today. A quick comparison shows where you stand. A broker can also contact your current lender on your behalf and ask whether they can lower your rate.
2. Consider refinancing
If another lender offers a lower rate or features that suit you better, refinancing could reduce your repayments. Switching can come with fees, so it helps to weigh the potential savings against the costs first.
3. Make your offset account work harder
If your loan has an offset account, the cash sitting in it reduces the balance you pay interest on. For example, with a $500,000 loan and $20,000 in your offset, you’d generally pay interest on $480,000. A redraw facility with extra repayments works in a similar way.
4. Make extra repayments where you can
Paying more than the minimum brings your balance down sooner and reduces the interest you pay over the life of the loan. Even small top-ups add up. Check your loan for any caps or fees on extra repayments before you start.
5. Give your household budget a check-up
Higher repayments are a good prompt to look over your spending. Review your recurring costs, such as subscriptions, insurance and energy plans, and consider directing what you save to your mortgage or offset account.
