How to lower your mortgage repayment in Canberra

The Canberra Times

How to lower your mortgage repayments in 2025

Transcript

00:00If you're a homeowner, I've got bad news for you.

00:02It's not looking like interest rate cuts

00:04are going to be as significant in 2025

00:06as a lot of us expected.

00:08So it might be time to evaluate your home loan

00:10so that you're not in mortgage stress later in the year.

00:13I've got some tips for you, but first,

00:15let's talk about how you might be able to

00:16squirrel away some extra money this year

00:18to make the repayments work.

00:20Tip number one is cutting your discretionary spending.

00:22Now, we're not talking the whole

00:24avocado and millennial toast debate again.

00:26We all know that was stupid.

00:27And frankly, we deserve nice things.

00:29But we are talking about taking a measured approach

00:32to the ad hoc purchases that you make.

00:34The brokers I spoke to said she's seeing

00:36increasing numbers of young people,

00:37particularly Gen Z, busting their budgets

00:39because they're spending on things

00:41that they get targeted ads for on social media.

00:44Now, full disclosure, I was influenced to buy

00:47these sunnies and these headphones on socials last week.

00:49And I mean, I don't regret them,

00:52but they did kind of blow my budget for the fortnight.

00:55All right, I look like an idiot.

00:56Let's get back to business.

00:58So cutting some of your discretionary spending

01:00through having a clear budget with goals set

01:02and learning about financial literacy

01:04through podcasts or free online courses

01:05can be a really helpful way to make sure

01:07that you have some extra money to spend on that mortgage.

01:10Side note, fellow Canberrans, we're doing pretty well.

01:12The national average for discretionary spending

01:15went up by 3.2% from October 2023 to October last year.

01:19But in Canberra, that rise was just over 1%.

01:22All right, now that we've got some more money to spend,

01:24let's talk about how to use it well.

01:26The most obvious thing to do here

01:28is to negotiate your home loan rate.

01:30CanStar provided the Canberra Times with some figures

01:32that found if you go down to a 6.33% rate

01:37on a $600,000 home loan,

01:39then you'll be saving more than $4,500 a year

01:43compared to if you stay on the 2022 average rate of 7.11%.

01:48Doing a fixed rate with relatively low interest,

01:50a lot of mortgage brokers are suggesting

01:52making additional repayments as early as you can.

01:55Not only will this get you prepared

01:56for what will probably be your minimum repayment

01:59once you're off that fixed rate,

02:00but it's also going to take a significant amount of money

02:03off your principal early,

02:04which will save you a lot on interest in the long run.

02:07If you've got other debts like credit cards or car loans,

02:10it can be really helpful to consolidate them

02:12into your mortgage because it'll mean

02:13you're spending less week to week paying off debt.

02:16The catch to this one,

02:17if you're not making additional repayments on your home loan

02:20that you've consolidated all of those debts into,

02:22then you are going to be paying a lot more in interest

02:25in the long run.

02:26But mortgage brokers I spoke to said

02:28that many people were still opting

02:29for this option at the moment

02:30because it is alleviating the cost of living crunch

02:33in the short term.

02:34Life's expensive.

02:36Good luck.

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