Below are some steps you can take to reduce the effects of rising interest rates:

1. Consider a fixed rate home loan.

If you are on a tight budget and you want to know exactly what your monthly repayments will be, consider getting a fixed rate home loan. A fixed rate loan locks in an interest rate for a set period of time, usually between 1 to 5 years. Before you get a fixed rate loan, speak to a qualified mortgage broker first to ensure that this is the best option for you. Your mortgage broker may be able recommend alternative mortgage products that may suit your needs and circumstances better.

2. Increase your loan term out to 30 years.

Increasing the term of your mortgage loan to a maximum of 30 years will greatly reduce your monthly repayments. For example, for a $250,000 loan with an interest rate of 7.07%, by increasing your mortgage loan term to 30 years, your repayments will be reduced by $103 a month. We recommend that you seek professional financial advice from your mortgage broker first before you increase your loan term to ensure this is the best option for you.

3. Don’t be fooled by Honeymoon Rates.

Many banks will advertise attractive honeymoon rates in an attempt to lure more clients. These rates are usually one percent lower than the standard variable rate, but after the honeymoon period has expired (after 12 months), these mortgages default back to the standard rate. Make sure you know what your interest rate and new repayments will be after the honeymoon period has expired so there are no nasty surprises.

4. Consolidate your debts.

If you have multiple debts, such as personal loans and credit cards, consolidating all your debt into your home loan will save you having to pay a much higher interest rate. As a result, it will leave more money in your pocket.

5. Make more repayments

Making fortnightly or weekly repayments rather than monthly repayments will help reduce your mortgage and the amount of interest you pay. If you have extra money, for example extra savings, an inheritance or tax return, consider putting the extra money into your mortgage. The mortgage balance and the amount of interest you have to pay will be reduced.

6. Refinance your home loan

Is your current mortgage loan full of hidden fees or extra features you don’t use? Is your mortgage loan still the best option for you? Consider speaking to a professional mortgage broker about a home loan review. A mortgage broker will check to see if your loan is still the best option for you based on your needs and current financial circumstances.

7. Get appropriate insurance

If you are worried about the current economic climate or your job security, then it might be a good idea to get insurance. Income protection will protect you and your family in case you lose your job or you are unable to work due to illness or serious injury.

For more details and assistance with your home loan, contact an Australian mortgage broker for a home loan finance review.