Hugh shared some knowledge in The New Daily article, ‘Mortgage prison‘: Home owners facing budget squeeze as interest rates rise’.
Centaur Financial Services managing director Hugh Robertson said the outlook for property prices means the days of “free equity” for home owners are over.
“Over the past two years, if you bought a house it was instant equity,” he said.
“But now you have to earn it, and the only way to do that is by being disciplined.”
Mr Robertson said home owners should avoid panicking if their equity position goes backwards, and continue paying their loan repayments.
“There’s no alternative,” he said.
“Don’t think that you can sell and wait for the bubble to burst – I’ve seen people try that too many times.
“You don’t need to panic. If you keep up repayments, the bank isn’t going to call the loan on you.”
Mr Robertson said this means home owners should dig in and remain patient.
“Twenty years from now your property will be worth more than it is today,” he said.
Mr Robertson said that will put owners in a good position to make the most of rebounding property prices down the track, because they’ll own more of their home when the correction has finished.
Mr Robertson said households should try to prioritise their mortgage debt as these costs rise, as it can be easy to fall behind as rates go up.
“You should start to factor in higher interest rates [than currently] into your repayments – that will save you from stressing about rate rises at night,” he said.
“If you can’t, then ask yourself what you need to do to be in a position to be able to afford it.”