Beware of increases in mortgage interest rates

Preparing yourself for Increased Interest Rates on Mortgage

12:58 14 February 2014

There is really no perfect way to insulate yourself from the onslaught of increased interest rate, but just so you will not be so totally financially displaced by the additional expense, see if the following tips can help ease the pain of dealing with interest rates hike.

 

Consider Fixed Rate Mortgage

When interest rates become very volatile, changing to a fixed rate mortgage scheme could be the best option to take.  A fixed rate will enable you to manage your budget more effectively as your allotted budget for mortgage repayments will stay the same for the remainder of the fixed- term.

 

However, before you do anything, make sure that you have read the new terms and conditions and that the fees for changing to a fixed rate will not cost you more than if you stayed on your current variable scheme.

 

Change your scheme at the time when the interest rates are just beginning to rise to get the most out of the switch.

 

Reassess Your Expenses and See on what areas you can cut down to cover the additional costs

You might have had been spending the money you saved from lower rates in the past, but as the rates take a turn for the worse, you might have cut down on unnecessary expenses so you can cope with this necessary expenditure.  When you have cut down enough to cover the increase, you can channel other savings on over-payment of the mortgage to shorten payment terms.

 

Find another source of income or increase your income

Some ways to increase your income are:

 

1.See if you can cajole your employer to give you salary increase.

 

2.Find a new job that pays higher salary.

 

3.Get yourself a second job or endeavour on a part-time business.

 

4.Rent your home to temporary lodgers or convert it to a bed and breakfast.