How to lower your mortgage repayments in 2025
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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.