Tips to Manage Home Loan Repayments

Once the excitement of buying your home sets in, it can be easy to forget the most important part – paying it off. Ensuring that you meet your repayments on time or even early is a habit you should get into, as it can save you a lot of stress later on.

We know that there are a lot of factors that can make repaying your home difficult, so in this article we’ll walk through a few tools and strategies that may be able to help you better manage your repayments.

Factors Affecting Loan Repayments

Can You Afford another Cash Rate Rise?

RBA Cash Rate and Interest Rate Rises affect housing affordability. Can you absorb a mortgage payment increase? Find out more here.

Learn more

There are many different factors that can affect the way you repay your home loan, and some of them can be pretty hard to manage.

First up, the talking point of the year – interest rates. Interest rates have been rising all year, and it's hard to predict where they're headed. High interest rates aren’t always a bad thing; savings account holders are starting to see some bigger returns thanks to higher rates. However, they can make it more difficult to repay your home. You may already have a close eye on your own interest rate, but don’t forget to check in on interest rates across the market. This can give you a better idea of how the market is performing in general, and may even help you get a better rate.

The type of home loan you have can also affect your repayments. If you have a fixed rate home loan, your loan may be converted to a variable rate or fixed at a different rate at the end of the period. Depending on your lender, they may do this automatically. Make sure that you’re keeping up to date with the state of your mortgage, for example whether it’s currently fixed, variable, or a mix of both. That should help you have a better idea of your repayments, and may help you avoid nasty surprises later on.

Some other factors that can make repaying your loan difficult are personal circumstances such as sickness or unemployment. Not having a steady or stable source of income can cause you to fall behind on your payments, and can add a lot of stress. While there’s no easy solution, a lot of lenders offer hardship support to their customers and may be able to help you restructure your mortgage to a way that is more manageable. If you are struggling with personal circumstances, you can reach out to your lender, a financial support service such as the National Debt Helpline or the Government’s Moneysmart program, or a counselling service such as Lifeline.

Consolidating Debt

Mounting debts can feel suffocating – here’s how to take back control and combine your obligations into one simple set of repayments.

Read our 'How-to' guide

Another personal circumstance that can impact your repayments is an increase to your personal debts, for example if you have had to take out a personal loan or have accumulated debt on your credit card. As these debts can have higher interest rates than your mortgage, you may decide to focus on your debts, causing you to fall behind on your mortgage. To get back on track, you can consider consolidating your debts and creating a budget.

How to Calculate Mortgage Repayments

Calculating your repayments doesn’t have to be a mammoth task. It may even be easier than you think! A helpful tool that you can easily access is a mortgage repayments calculator. All you need is some basic information about your loan, such as the loan amount, the loan term, your interest rate, and your repayment frequency. You can also factor in other elements, such as if you have an offset account or make a lump sum payment.

Another factor you can calculate is the impact extra repayments have on your loan. Most loans will allow you to make extra repayments, so calculating these could give you a better idea of how much these extra payments can help you save.

While calculator tools are very useful, they are used as indications only and do not take into account your personal financial situation or fees and charges. Reach out to your lender if you need some help, as they’ll know more about the state of your loan and other factors you should consider.

Helpful Home Loan Calculator Tools

Home loan calculators can give you a better idea of the current state of your loan, and may identify areas where you can save.

• The mortgage repayments calculator we discussed earlier is a very useful tool, as it allows you to factor in multiple different elements.
• The home loan comparison tool compares many different types of loans, such as variable loans and fixed term loans, and may help you find a better deal.
• Using a budget planner tool can also help manage your repayments. You can use it to create a spending and saving plan, letting you better budget for regular and extra repayments.
• If you need more information about your loan, entering some details into the home loan key factsheet tool gives you a comprehensive guide to your loan. It gives you more information about the fees and charges associated with your loan, your expected repayments, and your interest rate.

Tips to Managing Home Loan Repayments

• Changing the way your loan is structured may help you better manage your repayments. Splitting your loan into a variable portion and a fixed portion may allow you to make extra repayments into the variable part of your loan, while still giving you the security of having part of your loan locked into a fixed rate. Otherwise, you may choose to fix your loan to its current rate if you are worried about rising interest rates. However, don’t forget that if interest rates lower while your loan is in a fixed rate period, you’ll have to keep paying that set rate.
• If you are struggling to pay your repayments on time, consider automating your payments or using direct debit. Doing this means allowing your lender to access your account and automatically withdraw your payment at the agreed date, like the way your Netflix account or gym membership works. Automating your payments ensures that they occur on the due date, and can help keep you and your mortgage on track. However, you’ll still need to make sure that your account has enough money in it to meet the repayment, otherwise you may risk being charged with a dishonour fee.
• Changing the frequency or amount of your repayment can help you save in interest payments in the long term. You can use a mortgage repayments calculator to compare how much you save if you have monthly or weekly payments, and how much you could save if you start making some extra repayments.
• 

  Accessing Your Home's Equity - Its Benefits, Uses, and Costs

  Take advantage of mortgage equity by refinancing. Learn everything you need to know to improve your spending power.

  Learn more
  After holding your loan for a while, you may want to consider refinancing, or you may find that your loan is not the best deal out there. Don’t forget to keep looking for a better rate, so keep your eye on the market and a home loan comparison tool close at hand!
• Speaking to a lending specialist can help you identify more options or solutions. Reaching out to your lender is also worthwhile, as they may be able to get you a better rate or help you out if you are experiencing hardship.