How to Meet the Threat of Higher Interest Rates?

In the last few years, interest rate rises have risen appreciably. These rises were caused by the RBA adjusting their monetary controls in an attempt to reduce rising inflation.

How will the rising interest rates affect you? Perhaps a little at first, but if you have not allowed much room in your budget for rate rises and have high interest unsecured loans (like credit cards) or you have taken on an excessively large mortgage then you could be in trouble.

The impact on your borrowings

For several years interest rates have been at historic lows, tempting people to live more and more on credit. But with rates increasing, credit card debt, unsecured loans and mortgage rates will all become increasingly harder to manage.

If your home loan is a fixed-rate mortgage you may have nothing to worry about. However, if you have a variable rate mortgage, you will pay more for each successive rate rise. You could, therefore, consider refinancing your loan to a fixed-rate mortgage.

Unfortunately if you also have unsecured consumer loans like personal loans, credit card debt or even high interest secured loans like a car loan, these will also increase along with rate rises.

Your best choice is to start paying back the highest interest loans first and draw up a budget so you can see where you can squeeze out some extra money to better manage your repayments.

What traps many people though, is that they must make their mortgage repayments first as a matter of priority, otherwise they run the risk of having their house foreclosed.

In this situation it may be worthwhile seeking a mortgage refinance loan, which combines the lower interest mortgage loan with higher interest unsecured loans at an overall lower interest rate. This one step can assist you eliminate the high interest debt immediately, providing immediate budget relief.

These types of loans usually offer more generous repayment plans too so you can better manage your budget.

If this situation is applicable to you and you have taken out a mortgage refinance loan, it can be a good idea to simply cut up your cards and not run the risk of being in this situation again,

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We recommend you visit one the following providers to help you reduce your debts

• Fox Symes - Have assisted over 30,000 Australians reduce their debts
• Debt Relief - Offer a free debt analysis for Australians
• Mortgage Relief - Can assist you consolidate unsecured debts into your mortgage and reduce your overall interest rate.