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How to Manage Your Living Expenses and Mortgage

By Kevin Kelly

Increased living costs are a natural part of our daily lives. It’s no secret that when food, bills, interest rates and petrol prices increase, our budgets are impacted immensely.

There are steps that can be taken before these increases occur to ensure they don’t throw your budget, and your life, in chaos. They say prevention is the best cure and with these five essential tips, you’ll be more prepared for those increasing living costs whilst still being able to pay off your mortgage.

Step 1: Is your home loan the perfect match for you?

Everyone is different. Our needs, our lifestyle and financial circumstances all differ from the next home owner. So a home loan which might be perfect for one person might not be so perfect for you. Consider how competitive your lender’s interest rates are. Consider what features you are paying for, what ones you aren’t using or what you don’t need or have, and take a close look at the fees you are paying. Compare cost versus benefit for switching loans and/or lender.

Step 2: Are you paying extra when you can on your home loan?

Making lump sum payments such as tax return, bonus or any wages left over on your mortgage reduces the interest on your loan and the loan term. Paying extra also helps you build a financial buffer for those times of need. So, if you aren’t paying a bit extra on your mortgage on a regular basis, now is the time to start.

Step 3: Are you repaying at a higher rate?

It is a great idea to get in to the practice of paying your mortgage off as though its interest rate was at least two percentage points higher. Doing this prepares you for rate rises and unexpected financial changes. Good savings habits are also built.

Step 4: Still struggling with repayments?

Considering repayment reduction strategies, such as extending your loan term or debt consolidation, could also be beneficial. It is imperative though to consider the financial and emotional pros and cons beforehand as stretching your debt over a longer period will attract interest with every extra month.

Step 5: Are you spent?

Consider what you’re spending on little things. Are you spending more money than necessary on transport, entertainment, takeaway food and other luxuries? List your list of expenses and work out ways to save.

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