Manage Your Mortgage

This year, continued rises in food prices, utility bills, interest rates and other living costs will have a considerable impact on the budgeting efforts of property owners repaying a home loan.

Australia's largest independently-owned mortgage broker, Mortgage Choice wants to help borrowers cope with increased expenses and make the most of their mortgage in 2011.

Company spokesperson Kristy Sheppard said, "The 'Great Australian Dream' is a widely celebrated feat but the reality of repaying a mortgage can be challenging at times. A financial review can lessen the burden and put you in good stead for the year."

"According to Mortgage Choice's 2010 Consumer Sentiment Survey the biggest concern for 2011 was living costs such as utilities and clothing, followed by interest rates, then economic management at the Federal Government level, job security and food costs.

"The start of the year is an ideal time for re-evaluating your mortgage choices and preparing a new, forward-thinking budget to help mitigate stress caused by such concerns.

"Remember, you're not alone. Your financial planner, accountant, lender and/or mortgage broker can assist with budgeting, revising your repayment strategy, discussing alternative finance options and determining how you can make the most of your home loan and other debt commitments."

Here are the top five mortgage tips:

Step 1: What bang are you getting for your buck?

Financial circumstances and lifestyles change, as do your needs. Consider how competitive your lender's interest rate is, what features you are paying for and aren't using or don't have and need, the fees you're forking out and the cost vs. benefit equation for switching loans and/or lender.

Step 2: Can your mortgage work better for you?

Are you throwing lump sums into the loan account when possible e.g. your tax return, bonus or leftover wage? Every cent counts in helping to reduce the interest owed and the loan term. Plus, contributing more when you can helps build a financial buffer for times of need.

Step 3: Are you repaying at a higher rate?

Have you been repaying your mortgage as though its interest rate was at least two percentage points higher, preparing yourself for rate rises and unexpected financial changes? This will encourage a good savings habit and make adjusting to increased living costs and interest rates less burdensome.

Step 4: Still struggling with repayments?

Consider repayment reduction strategies such as extending your loan term or debt consolidation. Keep in mind this will stretch your debt over a longer period, attracting interest with every extra month. You'll need to weigh up the financial and emotional pros and cons beforehand.

Step 5: Are you spent?

Are you spending more money than necessary on transport, entertainment, takeaway food and other luxuries? Continually list your expenses to discover savings. Once you've revisited all of the above steps, re-do your budget so you really are beginning the year confidently ahead.

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