Interest rates will fluctuate from time to time. At times, the changes are negligible and will have almost no bearing on your repayments but you need to look out for substantive changes. When interest rates are low, you ought to make sure that you are paying the lowest or one of the lowest interest rates. You cannot have your bank; credit card company or other lenders keep your interest clocked at higher rates when the central bank has already lowered the lending rates.

• If you have a fixed rate of interest on your mortgage, then it would be advisable to change to an adjustable rate before you can benefit from the reduced rate of interest. If you already have a floating or adjustable rate of interest, then you can find out if it has been reduced to the extent it should have after the rate cut. It is imperative that you try to make the most of the period when interest rates are low as they would not remain low forever. They will be increased in the future and your interests, hence your repayments will increase.
• There are many ways you can take advantage of low interest rates. You can consider fixed rate options when the interest rates are low. That will help you to fix the low interest rates for a certain number of years. This can save you a ton of money. Many people wait for such times when rates are low to borrow money and they opt for fixed rates.
• You may wish to review your existing loans. You can consider switching to a cheaper mortgage or you can always opt for any provision of transferring a loan to a lender that charges a lower rate of interest. Refinancing and revising your repayment can be another solid option.
• Lower rates of interest provide the perfect opportunity to reduce your debts or to be completely free of debt. You can repay quickly, make lump sum repayments or you can try to repay as much as is possible so you have little to repay when the rates spike up again.

 

As always we recommend speaking to your YFG Lending specialist to guide you to the best strategy for you!

Budget planning is all about numbers. The firmer grasp you have over your incomes, expenses and savings, the better you would get at budget planning and long term financial planning. To get started with budget planning, you need to know five numbers.

• The first number is the amount of money you are earning. Depending on how many earning members you have in your family and how any of you are contributing towards the same financial goals, there may be one or more incomes. Also, you must factor in the returns on any investment that you have. From interests accrued on savings to dividends on shares, every incoming fund including but not limited to your salary goes into this first number. For effective budget planning, every earning member in a family must be a part of the exercise. Else, it is futile.
• The second number pertains to the expenses. The timeline for expenses must correspond that of the income. If you are earning fortnightly or calculating quarterly incomes, then your expenses must also be for a fortnight or three months and likewise. To calculate the expenses, factor in all your financial obligations and expenditure that you have to attend to. From mortgage payments to credit card bills, utilities to groceries, shopping to discretionary expenses, everything must be calculated to get to that number.
• Once you have your total income and total expenses, you must arrive at a number that you wish to save. Make sure you have a timeline. Deciding to save ten thousand is futile if you don’t have a deadline. This number, the number of savings you need in a certain period of time, has nothing to do with the dreams you may harbor. Forget the reasons why you are saving. Just focus on the number. Now, figure out how much you have saved already and how much you need. Do the math and arrive at a monthly figure or quarterly if you like. Going for the least denominator is always better. Putting aside a hundred bucks a week is easier than extracting a thousand bucks all of a sudden from one pay cheque.
• You would have a long term goal and very short term goals. Between the two have a midterm review policy. Every three months or six months you must check on your savings and record your progress. This interim number is very important as it will determine if you have the right heading.
• Finally, you must have a threshold for specific periods of time that you must cross. For instance, twenty thousand in five years can be broken down to five thousand in the first two years, fifteen thousand by the fourth year and the remaining five thousand in the final year. The more you save now, the better it is. You cannot predict untoward developments in your life.