As the economy continues to grow and inflationary pressures increase, the Irish central bank has been raising interest rates in recent months. This has significant implications for individuals looking to get a mortgage or who already have a mortgage, as it means that their monthly payments are likely to increase. For those with a variable-rate mortgage, the impact of rising interest rates can be particularly severe, as their monthly payments can fluctuate based on changes in the interest rate. It’s important for individuals to understand the impact of rising interest rates and take steps to prepare for the increased costs.
In the blog we are going to look at different ways individuals can cope with rising interest rates.
Talk to a Financial Advisor
One of the key things that individuals should do when facing rising interest rates on their mortgages is to talk to a financial advisor like Alpha Wealth. We can help you understand your options and develop a plan to cope with the increased costs.
Fixed Mortgage
Another strategy is to consider a mortgage with a fixed interest rate, rather than one with a variable rate that can change over time. This can provide more certainty and stability for individuals, as they will know exactly what their monthly payments will be for the life of the loan. We can help you compare different mortgage options and choose the one that’s right for you and put you in contact with a Mortgage Broker that we trust.
Extra Payments
You can make extra payments on your mortgage, either on a regular basis or whenever you have extra money available. This can help reduce the overall amount of interest they pay on their mortgage and pay off their debt faster.
Reduce Discretionary Spending
Individuals can also try to reduce their other expenses, such as by cutting back on discretionary spending or finding ways to save money on their monthly bills. This can free up more money to put toward their mortgage payments and help them cope with the rising interest rates.
Investing
One thing to consider when investing is the interest on any debt that you may have. As the interest on your debt increases, it can eat into the money that you are able to put into your investments. However, there are ways to offset this. One way is to ensure that any interest that your savings are earning is at least enough to cover the interest on your debt. This way, the net effect of the interest on your debt is reduced. Unfortunately, many banks are currently offering very low interest rates on savings accounts, so it may be difficult to earn enough interest to offset the interest on your debt. It’s important to carefully consider your options and make a plan that works for you. Check out our savings club
Ultimately, the key to coping with rising interest rates on a mortgage is to take action and make a plan. Alpha Wealth can provide the expertise and support that you need to navigate this difficult situation and find solutions that work for you. It’s important to remember that you don’t have to face the challenges of rising interest rates on your own. Let us help you with expert guidance and support navigate this difficult situation and find solutions that work for you.
Please note that we are teaming up with the Mortgage Architects to do a webinar on this topic on Friday, January 27th. You can register for this webinar here. Furthermore, if you have any questions or queries, please do not hesitate to contact us.