
As we move into 2025, we are hopeful for interest rate cuts, but there may still be some uncertainty. Regardless of whether interest rates go up or down, it’s essential for homeowners and buyers to get ahead of the curve. As a real estate agent, it’s important to advise clients on how to prepare for these changes in the property market.
Here are five key strategies to help you manage your mortgage more effectively.
Understand the impact of rate increases
Before anything else, it’s crucial to recognize that interest rates don’t stay the same forever. Rates can fluctuate, which means your mortgage repayments may rise. Take a moment to ask yourself how a potential rate hike could affect your financial goals—whether that’s a renovation project, future vacations, or other lifestyle choices. Use online mortgage calculators to explore different scenarios and estimate how much more you might need to budget each month if rates increase. This preparation will give you a clearer picture of how changes may impact your day-to-day finances.
Evaluate your loan’s competitiveness
Is your current home loan still competitive? With many lenders adjusting their rates, now is the time to review your mortgage to ensure you’re not overpaying. Even a small difference in interest rates can add up over the life of your loan, especially if rates rise further. If you’re not sure, compare your current loan against others in the market to see if switching could save you money. Variable rates are often more flexible, and in some cases, they may still offer lower rates than fixed loans, even as rates begin to climb.
Consider locking in a fixed rate
If you’re concerned that a rate increase might stretch your budget too thin, it might be worth considering a fixed-rate mortgage. Locking in a fixed rate gives you stability, knowing exactly what your repayments will be over the loan term, which helps with financial planning. Some fixed-rate loans even allow extra repayments, enabling you to pay down the balance faster. A “rate lock” feature can also be useful, as it secures the interest rate during the application or settlement period, protecting you from any sudden rate hikes before your loan is finalised.
Make extra repayments while rates are low
One of the best ways to protect yourself from future rate rises is to reduce your loan balance now. Making extra repayments while interest rates are still relatively low can help you save in the long run. Even small additional repayments can reduce the overall amount of interest you pay over the life of the loan. Consider using any surplus cash to make a lump sum payment, or increase your regular repayments if you can. If your loan includes an offset account or redraw facility, this provides added flexibility to access those extra funds if you need them later.
Minimise other debts
If interest rates rise, it’s not just your mortgage that could become more expensive—other debts, like personal loans and credit cards, might also carry higher interest costs. Reducing or eliminating other high-interest debt now will put you in a stronger financial position when rates go up. If you have outstanding balances on a credit card, work on paying them down. Switching to a low-interest or no-annual-fee card can make this process easier and save you money in the long term.
In a changing financial landscape, staying proactive about your mortgage is key to navigating rate increases with confidence. By preparing ahead of time—whether through reviewing your loan, making extra payments, or reducing other debt—you’ll be better positioned to handle the financial pressures that may come with higher interest rates.
As your real estate agent, I’m here to guide you through these changes and offer advice tailored to your individual situation. If you have any questions about managing your mortgage or preparing for rate increases, don’t hesitate to reach out!