Many people dream of owning their own property, but the current economic climate is making that more difficult. Although housing costs are set to plummet in 2023, inflation has persisted, with cost of living rising and heated debates over whether wages should keep pace with productivity or inflation. People who already have a mortgage are currently trying to figure out the best ways to manage them with the fluctuating market.
Ultimately, how much inflation affects your mortgage will depend on the kind of mortgage you have. If you are already paying off a fixed-price mortgage, inflation should not affect your payment as your interest rate is already fixed, however, if you have an adjustable-rate mortgage, this will fluctuate periodically, which could lead to rising interest rates and difficulty managing your payments. Either way, there are certainly some great, practical methods to manage your mortgage during inflation.
Refinance your mortgage
One of the best ways to manage your mortgage amidst inflation is to refinance it. This simply means paying out your current loan with a new one to take advantage of interest rates, shorten your loan term and reduce your repayments. You can refinance for a number of reasons, but one of the most pertinent ones to inflation is choosing to change your mortgage to a fixed-rate so your interest rates don’t fluctuate over time, as they do with an adjustable-rate mortgage. If refinancing your mortgage sounds complicated, just head to Joust for all the information you need on when and how to refinance your home, as well as an instructional guide on whether or not it is the right course of action for you. Refinancing isnt something you want to jump into, but with a good plan, it can really help you manage your mortgage, particularly during an inflation period.
Save money on utilities
If inflation is driving the cost of your mortgage up, every little cent helps. With energy prices set to rise again it may be the right time to complete an energy audit to figure out how you can curb those expensive cumulative costs of running your house. These kinds of fixes can include sealing air leaks, using energy efficient light bulbs, unplugging unused electronics, and even small lifestyle changes that aren’t related to utilities, such as carpooling and consolidating trips to minimise time in the car. You can even rethink your car insurance to see if you can save money by raising your deductible, negotiating a discount, reducing coverage, and ultimately comparing quotes for a better overall deal.
Clear your debt
The greatest financial minds agree that building wealth is almost impossible with existing debt. In order to make your mortgage and other investments manageable, the first step should be to clear off debt, particularly debt with high interest repayments. It is like the old analogy of a boat with a hole in it– debt is the hole and if you dont fix it, your finances will probably sink.
Reduce rates on other debts
Clearing your debt is a big task, but you can start small by reducing rates on existing debts by paying off credit cards and focusing on getting credit cards with a 0% annual percentage rate (APR). By securing lower interest rates, you can make your monthly repayments on your existing debts, and this money can be used towards your mortgage payments.
Cut unnecessary costs
The enduring theme here is save money wherever you can. You would be surprised how much little fees and subscriptions can cost in the long term. If you have multiple streaming services it may be time to trim the fat. Another way to see where you can cut costs is to do an audit of your spending, or create a budget to see where your costs are, and where they can be cut.
Increase your revenue streams
“Make more money” does not sound helpful on its face, it’s an obvious method to manage your cost of living. But this does not mean you necessarily have to work your fingers to the bone to make more. IN order to make more money to manage your mortgage, you should look into passive revenue streams such as renting out your car, parking spaces, your spare room, or even doing creative things like writing an e-book or selling art, poetry or knitted sweaters online. It doesn’t matter what it is, but passive income is a great way to give you extra money and take some heat off those mortgage repayments.
Comments