Mortgage loan strategies in difficult times

Mortgage loan strategies in difficult times

1 April 2008

Mortgage loan rates are only looking to get higher in the near future due to the Reserve Bank of Australia encouraging a conservative fiscal policy. If you can see yourself struggling under further interest rate rises, then it could be a good time to reconsider your current mortgage loan payment strategy.

To begin you should analyse whether your current loan is offering the best value in terms of cost compared to service. You may have opted to include features in your loan that you believed would be useful but have since found just contribute to a larger monthly bill. If this is the case, then it may be wise to refinance your loan under more favourable conditions to your repayment strategy. Be careful about what you decide to lose, however, as a redraw facility can actually help you to repay your mortgage loan.

Before moving on to how a credit card and redraw facility can help you pay more of your mortgage, you must do an audit of your budget. There are many areas of spending that can easily creep up if we let them, even things we consider vital. If your grocery bill is higher than you would like it to be, it's quite probable that it can be reduced without forcing yourself to starve. By simply removing snack foods you may remove $20 or so per week. That's $1040 per year. Figuring the cost of what you cook may lead you to cooking less expensive cuisine. Bad debt may also be part of your troubles, so if you can remove a source of bad debt, or consolidate your debts for cheaper monthly payments, then do so. Just consider every part of your budget carefully, regardless of whether you think right now that it can't be improved, and you could find you're easily keeping enough money to cover your mortgage loan.

Now, if you have obtained a loan with a redraw facility and have a credit card with enough of a credit limit to cover your normal essential costs that also includes a significant number of interest free days, then you may wish to set up your pay so that it is transferred directly into your mortgage loan. In this manner, you can reduce the amount of interest that is accumulated on your mortgage loan by having the greatest amount paid off at any time. You simply pay for everything with your credit card and repay it in full before the interest free period expires.

Please browse our site for a great range of lenders that could provide you with a high value mortgage loan.

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