Noel Whittaker’s simple tip for coping with mortgage repayments

Noel Whittaker has a simple tip for managing your mortgage when rates rise again.

rate rise

The Reserve Bank of Australia (RBA) has kept the cash rate low for a record 14 months in a row, but with the Global Financial Crisis (GFC) well and truly behind us, many are predicting a rate increase early next year.

The historic low rates were put in place to protect Australians from the GFC and also to encourage spending. Most people took the opportunity to buy houses. Many borrowed more than what would normally be advisable, while some stayed within their means but will still be open to ‘rate-rise shock’ when the time comes.

And that time will come. Some experts are predicting that the rate will remain steady for at least six months, while others are expecting an increase early next year.

Either way, as finance guru Noel Whittaker says, it will be a wake-up call to anybody with a home loan, and especially to anybody having problems making their payments now.

So, if you’re one of the thousands of households that will face the pain of repayment stress, how does Noel suggest you cope with managing your mortgage?

“If you have a mortgage now, I suggest you try to maintain payments at a minimum of $870 a month for every $100,000 you owe. This is based on a 15-year term at 6.5 per cent. This will give you a huge safety buffer if rates do start to rise, or if you get into financial stress,” he says.

There you have it. A simple tip to beat mortgage stress. How will you face increased repayments when rates rise?

Noel Whittaker is the author of Superannuation Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions.


    <p><em>All content on the YourLifeChoices' website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care, but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness with regard to your circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances. Financial comments provided by readers cannot be relied on as professional advice, but as general comments only.</em></p>


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    25th Oct 2017
    When I took out my mortgage in 2012 I factored in a rate rise to 10%. Then I paid that amount every month in fortnightly payments. I now have less than two years to go because I still pay the same amount. So no rate rise will worry me. Well not unless it rises above 10% in the next 19 months! But even then, given the outstanding amount is fully offset, I could just pay it out anyway.

    25th Oct 2017
    Retirees shouldnt have mortgages unless they have investment income in which case it doesnt matter
    25th Oct 2017
    I agree that retirees shouldnt have mortgages but if they were made redundant through no fault of their own, or the GFC affected them adversely, then maybe they have mortgages. Of course a lot of people thought they could make a lot of money and borrowed against their paid up properties and lost the lot and now they are in a mess and lining up for pensions.

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    16th Nov 2017
    This is an interesting situation and indeed the historical level of rates on the market. There are advantages in this, but you need a little more time to follow the situation. About mortgage market. There’s a huge choice of mortgage providers and products, so you need to know a bit about how each of mortgage type works, to decide between them. You must remember, however, that as an expat buyer, you might not have access to such a broad range of options.
    The first thing you have to decide is whether you want a fixed rate or variable rate product. Fixed rate mortgages will guarantee the same interest rate will be applied for the duration of the agreement - usually just for a few years.
    If you want to better understand some of the subtleties and better manage your finances, you can find information on different specialized resources and at the same time visit a blog where you will find personal finance answers to your questions.
    Variable rate mortgages, however, can cost more or less depending on how the interest rates change.

    6th Mar 2018
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    9th Mar 2018
    The memorable low rates were set up to shield Australians from the GFC and furthermore to support spending. The vast majority accepted the open door to purchase houses. Numerous obtained more than what might regularly be prudent, while some remained inside their methods, however, will even now be available to 'rate-rise stun' when the time comes. Assignment Writing Services

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