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The RBA has raised the cash rate to 4.85%. See how a home loan review, debt consolidation, interest-only or selling compare before you decide what to do.
The Reserve Bank of Australia (RBA) has increased the cash rate to 4.85%. If this interest rate rise is stretching your budget, review your whole financial position before you refinance, take out another loan or sell your home. A review shows which options are available and what each could mean for your repayments today and your borrowing costs over time.
The rise adds another concern for households already managing higher everyday expenses. If you’re wondering how much more your budget can stretch, you’re not alone. At Attain Loans, we can help you understand the options available and what they could mean for your repayments and total borrowing costs.
Your options after an interest rate rise
There isn’t one solution for every household. The right response to an interest rate rise depends on your priority: reducing monthly commitments, paying debts off sooner, retaining your home or preparing to sell. The table below summarises the main options this article covers and the trade-offs to weigh with each.
| Option | May suit you if | Trade-offs to weigh |
|---|---|---|
| Home loan review or refinance | Your rate, features or loan structure no longer suit you | Refinancing has costs, and the benefits need to justify them |
| Debt consolidation | Credit cards, car loans or personal loans are straining your budget | A longer term can increase total interest; debts moved into your mortgage become secured against your home |
| Temporary interest-only period | You want to keep your home and need short-term cash flow relief | The balance doesn’t reduce, the rate may be higher, and repayments usually rise afterwards |
| Hardship assistance from your lender | You are already struggling to meet repayments | Needs to be requested early; a new loan is not always the right solution |
| Selling with a vendor advocate | Selling is the right decision for you | You give up the property; check how the advocate is paid before you decide |
Start with a home loan review
A home loan review checks whether your current loan still fits your income, expenses and priorities after the interest rate rise. Your loan may have suited you when you took it out, but your circumstances may have changed since. A review compares your rate, features, structure and refinancing costs against what is available now.
A home loan review can help answer these questions:
| Question | What to check |
|---|---|
| Is your current rate still competitive? | Your rate compared with what other lenders offer borrowers in your situation |
| Are you paying for features you don’t use? | Package fees, offset accounts or redraw you don’t use |
| Would another loan structure better suit your circumstances? | Repayment type, loan term and how the loan is split |
| What would it cost to refinance, and would the benefits justify those costs? | Exit and setup costs against the savings over time |
If you’re planning to buy, it’s also worth updating your borrowing capacity before making an offer. A higher cash rate can change how much lenders are willing to lend. Our guide to what affects borrowing capacity besides income explains the other factors lenders assess.
Before you switch lenders, read our ten essential questions to ask before refinancing your home loan and the six common refinancing traps to avoid. When you’re ready, our home loan refinancing service compares options across lenders for you.
Look beyond the mortgage: debt consolidation
Credit cards, car loans and personal loans can put considerable pressure on a household budget, especially after an interest rate rise. Depending on your circumstances, refinancing or consolidating some of these debts could make repayments more manageable. The comparison needs to cover rates, fees, remaining terms and total costs, not simply the new monthly repayment.
A longer term can lower repayments while increasing the total interest paid. If unsecured debts are moved into your mortgage, they also become secured against your home. The structure needs to support your goals and include a realistic plan for paying the debt down.
Our article on whether consolidating debt really saves you money works through these trade-offs in more detail, and our debt consolidation page explains how we can help.
Want to stay in your home? Consider every option carefully
If keeping your property is your priority, tell us. That gives us a starting point for reviewing the options that could help you stay in your home after the interest rate rise, including a temporary interest-only period or hardship assistance from your lender.
For some borrowers, a temporary interest-only period may help with cash flow. It comes with trade-offs:
| During the interest-only period | After the interest-only period ends | |
|---|---|---|
| Loan balance | Does not reduce | Starts reducing as principal is repaid |
| Interest rate | May be higher | Depends on the loan and the lender |
| Repayments | Lower, covering interest only | Usually increase when principal and interest repayments resume |
An interest-only period needs to be assessed against your circumstances and your ability to manage the repayments afterwards. It should not depend on an assumption that rates or property markets will move in your favour. Read four things to consider before choosing an interest-only home loan and our comparison of principal and interest repayments for more detail.
If you’re already struggling to meet repayments
If you’re already struggling to meet repayments, contact your lender early about hardship assistance. A new loan is not always the right solution. The National Debt Helpline offers free financial counselling if you need independent support.
Considering selling? How a vendor advocate can help
Selling may be the right decision for you, and having support through the process can help. A vendor advocate represents the seller and can assist with choosing an agent, reviewing the proposed marketing approach and setting realistic expectations about the sale.
We can introduce you to vendor advocates who represent the seller. Some arrangements involve no additional fee to the seller, with the advocate paid from the selling agent’s commission. We can explain the arrangement offered by the advocates we introduce before you decide.
Review your options before deciding
Before you refinance, consolidate debt, change your repayments or sell, review your whole financial position. There isn’t one solution for every household, and the right option depends on whether your priority is lower monthly commitments, paying debts off sooner, retaining your home or preparing to sell.
Let’s start with your circumstances and work through the numbers together. As your local mortgage broker, Attain Loans can compare the options available and show what each could mean for your repayments today and your borrowing costs over time. You can follow the official cash rate on the RBA’s cash rate page.
Contact Attain Loans to arrange a review:
- Chrystal: 0401 442 002
- Bobby: 0422 938 708
Finance options are subject to individual circumstances, lender criteria and approval.
Further questions
What does the cash rate rise to 4.85% mean for my home loan repayments?
What costs should I compare before refinancing my home loan?
Should I consolidate credit card and personal loan debt into my mortgage?
What does a vendor advocate do when you sell your home?
What should I do if I cannot make my mortgage repayments?
This is general information only and is subject to change at any given time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.
