Unless your home loan has a fixed interest rate, it is highly likely that you will quickly feel the impact of the latest interest rate rise that was announced last week.

Choosing to fix your interest rate is one option but not necessarily the most attractive in the current market. Fixed rates are generally higher than the basic variable rate, so your repayments are likely to go up rather than down if you fix. 

That doesn’t mean fixed rate “specials” wont pop up from time to time but fixing is more about protecting yourself from future rate rises than alleviating the pain of existing ones. However, refinancing to a cheaper rate may still be an option – particularly if you’re paying the standard variable rate. As well as this, people who are borrowing more than $150,000 are generally eligible for banking packages offering discounts of up to 0.7 percentage points, which will help to ease the financial burden somewhat.

Whether you opt for the package or the no-frills deal will depend on whether you think the extras included in the banking package (such as fee discounts and credit cards) are worth the annual cost. 

If you are considering refinancing your loan, it is usually cheaper to do so through your own lender as it may waive requirements such as new valuation and establishment fees. If you have taken out your loan in the past couple of years, you may also incur exit or deferred establishment fees that will need to be weighed up against the benefits. 

If you’re one of the estimated 50 per cent of borrowers ahead on your home loan repayments, you may be able to avoid lifting your repayments with the latest rate rise. 

One option is to talk to your lender about restructuring your repayments so that you will pay off your loan in the remaining term, rather than staying on track to pay it out early. If you have a redraw facility, another option may be to withdraw excess equity from your loan and use it to help meet repayments.   

Of course, it may not be just your mortgage that has got you feeling stressed. Debt focus is most commonly on mortgages but in reality borrowers are having trouble making ends meet because they have multiple debts. 

If this is the case for you, consolidating your other debts into your home loan to take advantage of the lower home loan rate may be a way of making debt repayment more affordable. If choosing to take up this option, care needs to be exercised as your short-term debts will now form part of your home loan. If you don’t make an effort to pay them off quickly, they could cost much more in the long term. 

Extending your home loan term is another way to reduce repayments – though it can potentially end up costing more if you don’t make an effort to pay it out early once your finances have improved.