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Should I Wait to get a Mortgage Until Interest Rates Start to Fall?

Getting a mortgage is a really big decision. This is because you are taking on a big responsibility. You are not only buying a home which is very expensive, but you will be taking on, probably, the biggest loan you ever have. It is therefore very wise to take some time to consider the decision and the timing of it. You want to be sure that you will be able to make the repayments and therefore you may be worried about increasing interest rates making it too expensive. This may make you feel that you should wait and it is certainly something that you should consider in light of other things too.

Are interest rates likely to fall soon?

Changes in interest rate can happen quite often, perhaps every few months or they can stay the same for many years. It is therefore quite difficult to predict what might happen to interest rate during the course of a loan which will last for decades. Increases in interest rate can be a worry though and you may wonder whether you will be able to afford the loan repayments if the rates go up and this is understandable. However, worrying about changes that might happen in the near future may not be worth while in light of the term of the loan. This is because they could be very small compared to changes that might happen right across the loan term. However, if you feel that it could have an impact then it could be worth thinking hard about whether it is the right time for a mortgage or not.

Will changes be significant considering loan term?

It is therefore wise to think about whether you think the changes in interest rate will be significant. It could be that you expect interest rates to rise steadily and then stay high. Although these rises can be scary, if they then stop you will actually gain by getting a mortgage when the rates are lower as at least you will have some repayments at this lower rate. It is wise though, to think about whether you will be able to afford these increases in interest rate.

Can I afford rises in interest rate?

In order to work out what you can afford, it is worth looking at your monthly household finances and seeing what you tend to have available each month. Consider how easy it will be to pay the mortgage at the current rates and how much it would need to go up before you would tend to start to struggle to repay. It is important to do these calculations anyway as you will want to be sure that it is a sensible idea to take on the mortgage. You need to be aware of how much you would be expected to pay and whether you will find this easy or hard. Then consider what might happen if those payments rise. If this happens a long way into the future, it can be easy to think that you will be able to afford it then as you will have had a rise in salary. However, it is important to consider that in the future children may come along and they will be expensive. Also jobs have very little security these days and so you will need to consider whether you have a career that will enable you to easily find a new job, should you need one.

Would fixing the rate help?

One useful thing that could help you is to fix the mortgage rates. Most lenders offer a fixed rate as well as a variable rate. This will allow you to go a certain time period where your rate of interest will not change and this will mean that the amount that you have to repay will not change as well. Although this means that if the rate goes down you will not be able to benefit from a reduction in the rate, it means that if the rate goes up you will be protected. This can be great for anyone who feels that they would really struggle if rates went up. However, it is worth noting that you may be tied in to a deal like this meaning that you may not be able to move to another mortgage with this lender or another one or maybe even not sell your home without having to pay a large penalty. So, make sure that you know whether you are tied in and consider the consequences of this before signing up.

Have a back up plan

It is wise to have a think about how you might cope if the rates do go up. Think about what you can do to raise more money, perhaps by earning more, spending less or both. It is good to think about this so that you can make the changes that are necessary when you need to.

How to Repay a Payday Loan

Many of the concerns about taking out a payday loan tend to be with regards to the ability to repay it. The loans are often repaid in one lump sum and this means that it can be concerning that such a lot of money needs to be repaid in one go. There are things that you can do though, which will help you to be more confident that you can repay it.

Know what needs to be paid and when

It is so important to be aware of exactly how much you will need to repay and the date that it will have to be repaid. With a payday loan, a direct debit to repay the full balance tends to be set up on the day that you are paid. This means that you will have money going into the account and so you will have a much bigger chance of being able to repay the loan. However, if you have other direct debits going out on that day, have an overdraft to repay first or your pay arrives late then there may not be enough money available. It is therefore important that you check this out to make sure that there will be enough money there when the loan needs to be paid. Also making sure that there is enough money to then manage all of the other things that need to be paid before you get paid again is important too. This will enable you to avoid having to borrow more money a few weeks later when you need to buy items that you cannot afford.

Cut back spending

It is wise to start cutting back spending as soon as you take out the loan Only buy what is absolutely necessary. This should enable you to have more money available to repay the loan and to manage beyond as well. It can be hard to do this but it is worth it and it will only have to be for a short time until you are managing again. It is important to make sure that you prioritise your spending carefully so that you pay for all of the things that you really need and that you are obliged to buy and then go without things that you can manage without. It is worth reminding yourself that you will be able to buy these things once you have got the money situation sorted so you will not have to go without forever.

Borrow the minimum

It is always wise to make sure that you do not borrow more money than necessary. The more money you borrow, the more expensive the loan will be. This means that if you only borrow the smallest amount then you will only have to pay interest on that small amount. It can be tempting to get a bit extra so that you can buy a few more things and this is where it can get unnecessarily expensive. If you are aware of how much the loan is costing you, this can help you to avoid spending too much as you will think about the value for money you are getting or the things that you are buying with the money. So, make sure that you focus on the cost.

Be aware of your finances

It is easy to focus on the loan and what you will buy with it and not think about how your finances are doing and how they will be affected by it. You need to be aware of how much money you have coming in and when and how much you have to pay out regularly for different things. Knowing exactly what is going on will help you to plan much more efficiently for the loan. You will know what your commitments are and how capable you will be of being able to make the repayment.

Earn more if necessary

Once you have looked at your finances and are familiar with them and you know what you need to borrow and how much it will cost you to repay, you will be able to work out if you can budget enough to cover the repayment. If you feel that this will not be possible then you will need to consider earning some extra money in order to cover the cost. This could just involve doing some extra hours in the job that you are already doing or you may need to do some temping or freelance work. Do some online work or perhaps sell some things to make the money that you need. There are many ways that you could potentially make some extra money, you will just have to think about which method will be the one that will suit you the best. Consider how much you need, what time you have and whether you can work outside of the home and this will help you to focus in on the best option for you.