Why getting your home loan in place gets you ahead

Alex Soncini

Agrowing number of Australian mortgage holders are concerned about rising interest rates, with the majority of them taking positive action to mitigate the financial impact, according to new AMP research.

From my own discussions with homeowners many will be worried about their mortgage repayments if interest rates rise further, especially when repayments are compared to what they were paying in early 2022.

with all the doom and gloom still around from COVID-19, inflation and rising interest rates, Australians have been taking a wait-and-see approach to interest rates, when the rate increases will cease, and the property market, in the hope their property value is not negatively impacted.

we are still in uncertain times, the property market is falling and the reserve Bank of Australia has increased interest rates for a ninth month in a row to 3.35%, extending Australia’s fastest pace of increases in borrowing costs in almost three decades.

That puts borrowers in various situations, from first-home owners with limited savings buffers who are more at risk of mortgage stress, and owners who bought homes with low-deposit loans at the end of the pandemic boom could experience negative equity where the loan is greater than the property value. one of the biggest potential risks to housing market values is the ‘fixed-rate cliff’ where variable rates after the fixed rate period ends tend to be much higher than usual. Mortgage rates fell dramatically during the pandemic where fixed rates were very low. The issue is when the fixed period expires the home loan will usually revert to your lender’s current standard variable rate which has now risen significantly.

Smart borrowers are getting a head start.

Up until now, many people have put off buying a home or purchasing an investment property and refinancing their home loan because they were waiting to see what interest rates were doing and when the increase in home prices would cease or dip significantly. But the problem with that approach is that you can miss out on lenders offers or great buying opportunities when conditions calm, which

is what we’re seeing now.

This is a good reason why you should get your home loan refinancing, purchase pre-approval and other finances in place, even if you’re in wait-andsee mode: when conditions are right for you, you could swoop in for your perfect property while others are still sorting their mortgage out.

when you look at the property market overall, it makes sense to get your finances in place. Even though house prices across the country recent have dropped, overall property prices have been slowly moving upwards and if you’re waiting to see if the market will drop further, you risk seeing the amount you need to save for a deposit creep slowly up.

You also need to take into account that the current interest rate increases were from historic lows which created perfect conditions for ramping up buyer interest and house sales. And that means if your finances aren’t in order, you could miss out on your perfect property now or be able to refinance.

it’s so easy to get started call Alex at wealthwiz for a review on 0419 600 177 or email at alex. soncini@wealthwiz.com.au.