Empowering yourself to thrive financially in the face of interest rate hikes

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Empowering yourself to thrive financially in the face of interest rate hikes

If you are a homeowner, whether you have a fixed or variable, market-related interest rate on your bond, sooner or later your mortgage repayments will increase. These repo rate increases, which are designed to reduce inflation, have resulted in many homeowners feeling the pinch, and wondering how they will make their payments at the end of the month.


So, what strategies can we use to mitigate the financial pain we are all currently in?


Don’t be an ostrich

If you are struggling, it is important not to ignore the situation. No one is alone in feeling the effects of a tougher economic climate, and banks and financial institutions are on your side when it comes to finding some kind of financial relief. They may not be as understanding if you simply ignore monthly instalments and default on your bond. Speak to your lender and ask what solutions or assistance they can offer.  These may include a payment holiday, a renegotiation of some of the terms of your bond (including a possible extension on its duration) or assistance in selling your property vehicle to allow you to downscale.

Reorganise your finances

Have an honest look at your balance sheet. Are there items that you can eliminate including memberships, subscriptions, dormant policies etc. Cancel as many monthly outgoing as you can. You will be surprised at how significant the savings can be.

Give back

Whatever savings you make, try to direct them into your bond. Not only does paying more reduce your bond period and/or instalments but it will also accumulate and may free up cash amounts in the future through an access bond.

Buying and selling in uncertain times

If you are currently looking at buying a property, you will also be looking to negotiate the best interest rate on your bond. It is worth weighing up all the pros and cons of fixed versus fluctuating interest rates and how your choice will have an impact now or later down the line. Discuss all the options with your lender or your Mortgage Originator. Putting down as big a deposit as you can afford will make a difference to the amount and the terms of your bond, so try and put as much in upfront as possible.


If you are selling under financial duress, consider first what the additional short-term costs of a sale will be – legal and bond cancellation fees and estate agency commissions can be substantial, and you may find that in fact you can in fact afford to hold on to your property.  Speak to your Bond Holder for assistance.  Almost all the major financial institutions offer solutions in this regard.


Making good financial decisions, sticking to a budget and above all remaining calm will go a long way in helping you navigate the challenging times in which we find ourselves.


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