How to spread your interest rate risk.

While no one has a crystal ball, worrying and trying to pick the lowest interest rate can be very stressful. Consider this strategy.

• Splitting your home loan into two or three loans, fixed over different terms, can significantly help manage your home loan interest rates.
• Consider a mix of fixed interest rates over different terms and a small portion of a floating or variable interest rate.
• Set up this structure when you first take out your home loan or during your fixed rate review period
• Talk to your financial adviser or lender. They can guide you through the process and help you determine the most suitable terms for your financial situation.

Review your home loan regularly

• You may have options to pay off your home loan faster
• Have you had a pay rise, can you increase your repayments a little?
• Set up a savings account and make lump sums once a year – money from a bonus or tax refund
• For some people who are quite disciplined with their money, an offset mortgage or revolving credit is an option to consider (basically using your savings or weekly wage to reduce interest charged)

Stay informed about interest rates

• Especially if your loan is due for a fixed rate review or you have a floating loan and are looking to fix.
• Often when the Government makes announcements about the Official Cash Rate (OCR) this can have an impact on home loan interest rates.
• If your loan is due for review around the time of an OCR announcement, take notice and seek professional advice to find out what your options are.

If you have any questions or need further information, feel free to get in touch.

This information is of a general nature and is not intended as personalised financial advice. RIVAL Wealth is a Financial Advice Provider (FAP) licenced by the Financial Markets Authority to provide financial advice. Our disclosure document is located at rivalwealth.co.nz or a written copy is available on request