Mortgage housekeeping: 4 tips for when rates are rising

Sometimes checking in on the mortgage – and making adjustments – can be the key to home loan savings. Here are a few ideas.

With interest rates going up, many homeowners are looking for new ways to reduce mortgage stress. Here are some handy tips to tweak your mortgage and adjust to consecutive rate rises. 

1. Make home loan features work for you

If you have a home loan that includes a redraw account, offset account, or line of credit, now could be a good time to investigate how you could use these features more effectively. For example, some customers use several offset accounts to reduce the amount of interest they pay each month, while saving at the same time. Offset accounts – which can be transaction accounts – counterbalance or ‘offset’ the interest you pay. Importantly, it has to work for you and your budgeting.  

2. Look at your repayment frequency 

If you’re making your loan repayments every month, you could consider reducing the frequency to fortnightly. That way, you’re paying off a smaller amount, but chipping away at more of the principal.

3. Consider fixing your rate

If you think interest rates are likely to rise further in the new year, it could also be worth considering a fixed-rate loan. Fixed loans lock in an interest rate for a set period of time. Keep in mind, after the fixed term expires, the rate reverts to whatever the standard variable rate is at the time. 

Some borrowers like the certainty of having a fixed rate because they know what their repayments will be for the fixed term and can budget accordingly. Take a look at our Police Bank rates here.

4. Think about planning the year around windfalls

Another strategy for bringing down the repayments is trying to take a chunk out of the principal you owe. 

It’s not always easy if you’re using a fixed salary to pay off the loan, which is why some customers use windfalls like tax refunds, dividends, or inheritance to pay down the mortgage more quickly.

General advice only.