Over Christmas, when the credit card often gets a workout, it is easy for budgets to go AWOL. It can also be a time when financial complacency creeps in. Have you ever asked, ‘what would happen to my loan repayments if my financial circumstances changed’?
If your employment status changed, could you keep meeting your loan repayments? Life presents all manner of challenges – unexpected redundancies, illnesses, a shift from full-time to part-time work, or even a career move with a smaller salary. These changes can impact your ability to repay your home loan and meet other financial obligations.
How prepared are you?
Would you cope if rates rose by 2%? Find out, by using a home loan calculator to test financial scenarios – such as what your repayments would look like if rates rose. It’s easy to model how, by upping repayments, how much time you could shave off your loan, and how much you could save on interest. Try the MoneySmart mortgage calculator now.
Where to go for help?
If you think you may not be able to meet your repayments, you may be able to redraw extra funds from your home loan. Or, you may be able to take a repayment holiday if you’ve been making more than your scheduled, minimum repayments. Or, refinancing may be a suitable option.
Perhaps things are looking worse still? It pays to start a dialogue with us as soon as possible.
Build in a financial buffer
Making extra loan payments is an ideal way to build a financial buffer before things go into the red.
Here are some tips to help you start building your financial buffer
- Budget for everything. Yes, everything. From clothes to bills, healthcare, insurances and vehicle expenses. Factor in annual cost increases, too. Take 15 minutes to sit down and write out all your expenses – it’s a simple process, but vital to fully understand your expenditure.
- Stop paying bills late. Late fees bite and late payments could affect your credit record.
- Get financial help. An accountant/financial advisor can help you plan (and achieve!) your goals.
Contact us to discuss how we can help.