How to avoid falling off a 'mortgage cliff'

During the pandemic, interest rates were at an all-time low, and many Aussies took the opportunity to lock in fixed-term deals on larger amounts of debt than they could afford in the current rate environment.

Many of those deals are now ending, meaning that some borrowers are facing a huge hike in their repayments as rates continue to rise – the looming mortgage cliff. This month's hike saw the cash rate increase to 3.35%, with reported average variable mortgage rates now at 6% – for a homeowner who has been on a 1% or 2% mortgage, this represents a huge increase.

If you feel like you are on the edge, do not despair – taking action now could prevent you from finding yourself in a difficult situation in the months to come.

The first step? Return to your budget – assess your income, outgoings and what your finances would look like if your monthly repayments were to increase. Could you realistically afford these? There’s no sense in setting yourself a wholly unrealistic and unachievable budget then ending up overspending. Even if the rate rises are still within your means, if your deal is ending then it might still be worth exploring the market.

Step two – talk to us! Refinancing doesn’t need to be a complex process. We are experts at comparing your deal to the current deals in the market, helping you to find the best option for your plans – factoring in whether you are hoping to move in the longer term, have plans to do renovations or even if you are hoping to add some additional members to your household!

Over the last 6 months, we have helped many of our clients to negotiate with their current lender or refinance their loans, saving them thousands of dollars and helping them to achieve their financial goals.

Get in touch today and let us help you step back from the cliff!