This seems like a pretty simple question with a very obvious answer. The higher interest rates are the higher the interest costs payable for borrowers. End of story….or is it?
Interest rates need to be looked at in a bit more detail to try and understand how they affect your own situation, whether it be as a homeowner, property investor or business owner.
Nothing I have provided above is new or news to anyone. However there are some factors which are often overlooked when borrowers are considering using the cheapest interest rates available in our lifetimes. These include the following:
The most important thing to keep in mind with borrowing money and managing interest rates is to make sure you have a plan and you can manage interest rate rises.
If you are a homeowner, make sure you try and pay off your home loan as quickly as you can. This will be one of the best investment decisions you will ever make.
If you are a property investor, do your research to make sure your investment is not a dud and the rest is all about cash flow. Interest is still a cost so it makes sense to reduce this cost if you can. The best time to reduce your investment property debt is when interest rates are low. Eventually you want your property investment to be putting money back in your pocket!
If you are a business owner/farmer, again do your research so you know what your top price is to make the investment viable. Understand what income you will have to make per acre to become profitable, then determine whether this is an appropriate investment for the amount of money you will outlay and the risk you will be taking on.