Rising inflation and growing interest rates across the world continue to impact the housing market and in turn, mortgages. Looking at inflation or interest rates in isolation might spark ideas about how to approach your own financial situation, such as adjusting your mortgage payments.

However, small actions like these might not be sufficient to mitigate the overall effects of the economic forces at work.

Your objective should be to do a complete analysis of your finances and develop the financial acumen necessary to change the settings as necessary. Every aspect of your yearly mortgage financial check-up, including debt, cash flow, mortgage reset, and more, should be examined.

The actions that follow will put you in the greatest position to weather any economic upheaval while assisting you in taking stock of your finances and thinking through your mortgage alternatives.

Review your mortgage type

Examine your home loan’s structure and the things you can start doing right away to get ready for an increase in interest rates. If you have a loan with a floating rate, utilize a loan calculator to estimate what your payments would be once the current interest rate expires. This will help you understand the effect on your monthly repayments and allow you to make plans accordingly. This could be accomplished by reducing debt or by increasing savings before the current interest rate expires. Discuss options for refinancing your current mortgage with your lender right away, or look into the several mortgage options that are available.

Prioritize and take stock of what you owe

The highest interest loan should always be paid off first. To prevent paying late fees or past-due interest charges, try to match all the due dates and set a reminder to make sure payments are received on time. Due to their lower interest or financing rates, mortgages or house loans are often considered more acceptable forms of debt.

Create cash flow

Consider applying for a home equity loan or refinancing your property with full cash out if your properties are free of liens or have low Loan-to-Value ratios. It will enable you to access cash from your existing properties to reduce the short-term pressure on your cash flow. Keep in mind that doing so involves the same risks and demands the same financial restraint. If you lose track of your financial objectives, you can find yourself in a worse financial situation than when you started.

Look for consolidation of debt to lower the cost of financing

Borrowers who have debt with high-interest rates may be able to combine their balances into one loan with a lower rate of interest. In addition to saving money on interest payments each month, paying one bill with a single due date is often simpler than juggling many due dates each month. Through a balance transfer scheme that most banks provide, you can combine your unpaid invoices or obligations with high-interest rates.

How HSBC HomeSmart can help

According to a poll performed by HSBC, clients prefer flexible home loans, particularly those that allow them to lower their interest payments during periods of financial surplus. This is favored as opposed to investing in time deposits, which often offer lower interest rates.

Consumers will have more control over their finances thanks to this type of loan facility, which also gives them the freedom to withdraw extra money when they need it. This surplus can also operate as a type of early savings for such unforeseen circumstances and give consumers a cushion when their monthly repayment increases.

With the HSBC HomeSmart home loan, you can prioritize what matters to you the most. It has daily interest calculation and the transactional flexibility of a current account. Customers can deposit extra money to reduce loan terms and save on interest. Additionally, customers are free to withdraw extra money whenever they choose. A balance transfer program or mortgage refinancing service allows consumers to combine their outstanding debt with high-interest rates as an added benefit. Customers can apply for mortgage refinancing with a top-up and cash-out option for loan consolidation and receive 0% moving costs, up to RM15,000, as additional benefits (HSBC will absorb the stamp duty, legal, and valuation fees for loan documentation).