May 27, 2013
Nearly 85% of Australians feel positive about their current financial situation, describing it as either solid (23%) or reasonable (61%), according to the 2013 Homeowner Intentions Survey (the Survey) of over 1,000 Australian homeowners, conducted by Mortgage Choice.
Notwithstanding the fact that the current low interest rate environment has translated into significantly lower mortgage repayments for most home loan borrowers, the findings are still a welcome indication that most Australians are feeling positive about their ability to manage their finances.
The results of the Survey show that while the majority of Australians feel positive about their financial position, 37% listed ‘repaying my mortgage’ as their most pressing financial concern or commitment. This was followed by the ‘cost of living’ (25%) and ‘repaying credit card debt’ (16%) to make up the top three responses.
The fact that over one third of Australians may see their mortgage repayments at the top of their financial priority list is a really positive sign. Because let’s face it, for many of us, taking out a mortgage is often the biggest financial decision we will make, so it is sensible to take that commitment seriously.
The Survey also found that the majority of homeowners (77%) were willing or able to make additional repayments towards their mortgage. The most common habit to making extra repayments was contributing as much as they can to each repayment but redrawing funds if necessary. This was followed by contributing as much as they can to each repayment and avoiding any temptation to redraw the funds and making up the top three habits was rounding their repayments up to the nearest hundred.
If your investment strategy or overall goal is to repay your home loan then making extra payments is a great habit to get into. It will help you to repay the home loan sooner and to build up a buffer to cope with future interest rate rises or changes to your financial situation.
It was interesting to see that for those people who did make additional mortgage repayments, over 50% said they had not made any lifestyle sacrifices to do so. When asked whether they would continue to make additional repayments if interest rates go up, nearly 45% said they would as they had already factored in higher repayments.
With so many respondents finding extra mortgage payments manageable without lifestyle changes, imagine what could be achieved by making some small sacrifices and contributing as much and as often to your loan as you possibly can. Even small, regular extra repayments can make a significant difference. The sky’s the limit!
If you want to learn more about your home loan options, call us on 9432 6070 or click on the 'contact us' tab at the top of this page.