Whether it’s driven by increasing interest rates, rising property prices, or sometimes a combination of both, securing and maintaining a loan can be a real challenge. In fact, market volatility not only leaves potential borrowers wondering when and if the ‘right time’ will come but existing loan holders can also be left feeling the squeeze of rising costs without a moment’s notice.
Here are some of the most typical obstacles you might face as a borrower, with some tips around how to overcome them, so you can achieve your goals and ensure the financial security of your household is kept in check.
Tackling rising interest rates
Climbing interest rates will drive up the costs of your loan overnight, so it can be difficult to work out how to meet your obligations if your household income remains unchanged or budgets are already tight. In this case, you might consider speaking with your loan provider to negotiate interest only payments temporarily to help you through. In practice, this means the amount you owe will remain the same for this period as your principal repayments are paused, but your outgoings will be reduced, so you can sustain your loan until market conditions or your circumstances change.
Turning the perils of being self-employed into opportunities
If you’re self-employed, challenging economic times can have an impact on cash flow which, in turn, could have a knock-on effect on your ability to meet any loan repayment obligations. If you’re experiencing difficulties with cash flow, this might be an ideal time to re-evaluate your spending and costs as a sole trader, which might include eliminating any unnecessary expenses or even sourcing cheaper suppliers. While this might make it easier to meet your immediate loan repayments, this process could also leave you with a healthier bottom line in the long term and lead to new future opportunities.
Streamlining debts to unleash true borrowing potential
Getting approved for a loan is one thing but securing the amount of funds you need can sometimes be a challenge in its own right. Consolidating all your debts in one place, however, could increase your borrowing capacity because it reduces the total monthly repayments you might be making across all your loans. For example, consolidating personal loans, car loans, and credit card debts – among other types of debt – might help you secure the mortgage you need to buy your ideal home or help you refinance to fund renovation plans.