Panicking won't help pay the mortgage
5:00AM Sunday June 10, 2007
By Chris Daniels
Times are getting tougher for mortgage holders, but the experts are advising homeowners staring at interest rate rises to sit tight, go back to the family budget and not rush into hasty decisions.
Mortgage broker Mike Pero thinks the Reserve Bank's decision on Thursday to raise the official cash rate to 8 per cent might bring about a slow downturn in the property market. He said people should look closely at their spending, and at whether they could change the way they pay their mortgage.
"Refer to your budget, your household spending and look closely at money going out and money coming in - looking at prioritising your expenses and investments.
"Obviously, interest rates move, you've got no say in that. The next question would be: is your mortgage structured the best way possible?
"If you're tight on a monthly or weekly outgoing, then maybe restructuring your payments may be possible. Talk to a broker, and look at more innovative ways. It may be that they've got good equity in their home and higher repayments, maybe they can restructure payments in such a way that frees them up a bit."
Pero said talking to a banker or broker about it was the best way to start solving it. Asked if it would be better to move to more expensive floating rates rather than committing to a fixed term at an interest rate cycle peak, Pero said, "That's the million-dollar question".
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