Home Owners Are Worried About Savings
Following the delivery of the new Federal Budget we asked homeowners how they expected the changes to impact their household finances.
With the government announcing many significant cuts and tax increases, we found that homeowners are expecting an immediate impact on their household finances. The results of our online survey found that 42 per cent of the 581 respondents believed that they would not be able to keep their current savings levels. The survey results indicated 75 per cent of respondents expected to be negatively impacted by the latest budget, by either decreased spending or savings levels.
Of our online respondents, 17 per cent said that the budget would have no impact on their household finances and eight per cent said they expected to be able to save and spend more.
Lower interest rates over the past year have helped many homeowners either pay off their home quicker or provided additional money to put into their savings account. The budget will impact every household differently but all homeowners will be positively impacted by the lower interest rates on their mortgages and the downward outlook for the next several months.
It is important to make the most of historically low interest rates to give you an opportunity to save. Here are three ways you can ensure you use this time as effectively as possible to save:
1. Make sure you have the right loan
The first step is to talk to your mortgage broker to ensure you still have the most competitive and suitable loan available for your needs.
2. Review your budget for opportunities
It’s a good idea to review your household budget every three to six months to determine any changes in spending or savings opportunities. Aside from any changes in your earnings, look for any increases in spending that may have crept up the last few months and any savings you have made or could make moving forward. Regularly reviewing your budget ensures that your spending stays in-line with your financial goals and that any savings or additional income can help you reach those goals sooner.
3. Increase your loan repayments
When you first begin paying back your mortgage the majority of the loan repayment is generally servicing the interest and the remainder is paying off the principal. As you pay more and more off the principal loan, the interest portion of the repayment will be less and toward the end of the loan term the majority of the repayment will be principal.
If the current low interest rates allow you to, increasing your mortgage repayments will eat into your principal loan and reduce the interest you pay over the life of your loan.
If you have not reviewed your home loan recently or have any home finance questions please contact me.