Options


options

 

 

ME Bank’s latest Household Financial Comfort Report finds that 19% of those surveyed haven’t budgeted for an interest rate increase. This is despite most economists agreeing that interest rate increases are on the way (although not necessarily imminently). Our view is that you have time to plan for the increases, so now is the time to make sure you don’t get caught out when they arrive.

Here are some options :

 

 
Pay off principal now

 
While rates are low, investors who can afford it could consider paying off as much of their loans as possible. This will create a buffer for when rates do rise.

 
Fix some or all of your home loans

 
This will mean you can lock in interest rates while they’re low. However, putting all of your lending into, for example, a three-year mortgage reduces your flexibility. You may become stuck if interest rates drop or if you want to pay off lump sums. Depending on your situation, it might be better, then, to break your loan into a series of smaller sums – some on 1-year term, some on 2- or 3-year terms and some on floating rates. We can help you decide which options best suit your  needs.

 

Explore the scenarios

 
What would happen if interest rates increased 3%? How would you cope? If the answer is “I wouldn’t”, now is the time to seriously explore your options. Let us know if you have questions.

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