With interest rates and the cost of living rising, many homeowners are wondering how they can best keep on top of their finances. Here’s how ANZ could help with managing your home loan.
At the end of 2019 it would’ve been almost impossible to convince someone of the three-year rollercoaster about to hit the lives and finances of New Zealanders. From the mid-pandemic lows of our official cash rate to its current unprecedented hikes – with more than a few extra unexpected hurdles along the way – there’s been no “easy” way to budget for the situations that have eventuated.
For those who own homes, interest rates have been a stress factor. They were historically low during the pandemic, and they’ve now risen off the back of measures to control inflation – which sat at 7.2% in the three months to December 2022 according to the Reserve Bank. Homeowners have seen substantial mortgage repayment increases in the midst of an already tough time financially for many New Zealanders.
Amid these challenging conditions, people are hungry for some certainty, and when it comes to finances people often don’t know where to seek help. It’s important to reach out to your bank early so they can explore the options available to you that may help relieve the pressure.
Trying to manage finances isn’t easy at the moment, so we’ve worked with ANZ on five tips that could help homeowners get a better grasp on their finances, whatever may arise:
Optimise, optimise, optimise
Having the right home loan structure can make a big difference to the amount you pay over time. It’s not one size fits all, and there are different options that could suit you if your circumstances change. You might be trying to pay off your home loan faster with extra repayments. But with the challenges of high inflation, rising interest rates and the higher costs of living, not everyone is in a position to do this. Whatever your situation, your bank may have options to help you get ahead or relieve the pressure.
Is now the right time to fix?
Is your current fixed rate period coming to an end? Some banks will allow you to reserve a new rate before your fixed rate period ends – with ANZ, this can be up to 60 days before.
It’s important to remember rates can move up or down, so be sure you want to re-fix, as charges may apply if you change your mind about the new rate or if you make any other changes to your loan.
To lock in a fixed interest rate with ANZ, you’ll enter into a Reserve Rate Agreement. If you don’t use the rate or ask for other loan changes or to cancel your agreement, a Non-Utilisation Recovery may apply, which compensates ANZ for any loss they incur. See ANZ’s Home Loan Terms and Conditions (PDF 172KB) for detail.
Plan your budget using online tools
When reviewing your budget to account for home loan interest rate increases, you can get a head start on what your new home loan repayments could be with your bank’s online tools – such as ANZ’s repayment calculator. This can help you reset your budget and plan ahead so you’re more prepared to manage future financial impacts. You can also use these tools to see what your repayments could be at a higher interest rate so you can plan your budget for different interest rates in the future.
Talk through your options, sooner rather than later
If you find yourself stressing about the rising cost of living and how it might impact your ability to make home loan repayments, talking to your bank as soon as possible is important. At ANZ, a Home Loan Coach can talk to you about the possibility of extending your loan term or switching to an interest-only repayment structure for a period of time. If these options are suitable for you, they can talk you through what they might mean over the longer term. The sooner you talk to your bank, the more options they may have available for you.
It always pays to research
If you’re wanting some guidance about how to manage your home loan, there’s lots of online resources that could help, even before you chat directly to your bank. On the ANZ website there are articles, tips and tools explaining why rates are rising, how to go about financial planning and the difference between fixed, floating and flexible loans, which could help you get your head around some of the options available to you.
ANZ lending criteria, terms, conditions and fees apply. This material is for information purposes only. We recommend seeking financial advice about your situation and goals before getting a financial product. To talk to one of our team at ANZ, please call 0800 269 296, or for more information about ANZ’s financial advice service or to view our financial advice provider disclosure statement see anz.co.nz/fapdisclosure.