Following a series of interest rate increases this year, many Australian borrowers are feeling the pinch as mortgage repayments climb. While the pressure is real, there are practical steps homeowners according to the team at financial specialist Our Broker that homeowners with a mortgage can take to manage the impact of rising rates and regain some control over their finances.

1. Examine your spending

Start by looking at your household budget and expenses, such as regular takeaway meals, frequent dinners out, unused gym memberships, and multiple streaming subscriptions. These costs can quickly add hundreds of dollars every month.

Next, focus on your fixed costs such as your mobile phone plan, internet, insurance policies, and energy provider. By shopping around, even small savings across several bills can produce a meaningful difference to your cash flow. Every extra dollar you free up can be redirected to your mortgage.

2. Managing other debts

If you have various debts, you could explore a debt consolidation strategy with your broker. This involves rolling higher-interest debts, such as credit cards charging close to 20%, into your home loan, which may be at a rate closer to 6%. The increased cash flow this frees up can then be used to help manage increased mortgage repayments.

Likewise, if you have a HECS-HELP liability, the government may withhold around 5% of your income each year to repay the debt. For example, if you’re earning $100,000, that's about $5,000 annually. If your remaining HECS balance is $20,000, it could be worth considering using savings to clear the debt, seeking family support, or even borrowing to repay it. At an interest rate of 5.80%, a $20,000 loan would cost roughly $1,200 a year in interest, which may improve your cash flow by around $3,800 annually to put towards a higher mortgage debt.

3. Review your home loan structure

If repayments are becoming difficult to manage, it may be worth reviewing your loan structure with the help of a specialist, such as Our Broker. One option is to temporarily switch to interest-only repayments. This strategy reduces your monthly repayments because you are only covering the interest, not the principal. While it does mean you will pay more interest over the life of the mortgage, a short-term switch, say 12 to 24 months, can give you some valuable breathing space during periods of financial stress.

Another option worth considering is “refinancing”. By working with a finance specialist such as Our Broker, you may be able to secure a more competitive interest rate on your mortgage or better loan features. Even a modest reduction in your rate can translate into decent savings over time.

4. Boost your income where possible

While shaving expenses is important, increasing your income can help offset higher repayments.

Consider taking on short-term work through Airtasker or Uber. You might also look at monetising underutilised assets. At the same time, don’t overlook opportunities within your current job. Asking for a pay rise, taking on additional responsibilities, or investigating higher-paying roles can all help improve your financial position over the medium term.

Selling a second car or an electric bike that you no longer use can also provide you with extra cash. Also, renting out a spare room, parking space, or even storage areas can generate additional cash flow.

5. Tapping into a redraw

Some lenders allow you to reduce your mortgage repayments based on the outstanding loan balance, including any funds held in redraw. Importantly, you can still retain access to those redraw funds – meaning you could use, say, $30,000 in redraw to lower your repayments while keeping it available as a buffer if needed.

6. Moving home

For younger homeowners, perhaps you could move in with friends or temporarily return to the family home. Renting out your property could then help cover the increased loan repayments and provide some much-needed financial breathing space.

7. Act early and seek advice

If you anticipate difficulties meeting repayments due to the interest rate increases, speak to Our Broker as soon as possible, who can start the dialogue with your lender on your behalf.

Lenders are generally more willing to assist proactive borrowers by making available options such as repayment pauses, loan restructuring, or hardship arrangements. Call Our Broker today on 1800 913 677.