While an affordable home loan used to be considered no more than twice the annual household income, limited housing availability, higher property values, and increasing debt limits have driven that level up to an average home loan value of four times the annual household income. Add interest – even at the current low rates – and you’ll start to count every penny being poured into your home loan.

One way of making your home loan work more efficiently for you is to make sure you have the right structure in place. As with the type of home loan you choose, deciding on the structure within that loan is very important too.

So begins the great debate – to fix or to float?

You should consider fixing your home loan if:

• You want to take advantage of the current low fixed interest rates. At the moment fixed rates are as low as 4.19% – and could be driven even lower with the right negotiations – so fixing at these rates is a great way to play it safe with your home loan.
• You think the interest rates may be on the rise. Locking in a low interest rate before a rise can save you on two fronts – money and stress.
• You’re happy with your current repayment structure. You’ll have the added security of knowing just how much and how frequent your loan repayments will be over the period you fix for – this can be a life saver for healthy financial planning.

You should consider floating your home loan if:

• You think you may be in for a lower interest rate in the near future. Floating gives you the flexibility to take advantage of a constantly changing market, and as interest rates have slowly declined over the past year, it is possible that interest rates could fall even lower.
• You think you may be able to pay a little more towards your home loan in the near future. You may be due for a pay rise, or some other windfall that you want to invest into your home loan. This is a great idea! The interest saved on your home loan with any extra payments will be worth far more than any interest on a savings account in the long run.
• You like to take calculated risk. While there is every chance that rates could rise at any time, there’s a good chance they could dip even further.

You should consider a split between fixed and floating if:

• You want to play it safe. You’re keen to take advantage of the current interest rates, but don’t want to miss out on any potential interest rate drops in the future.
• You like the financial security that fixing will give you, but want the flexibility to pay off some of your loan faster too. By fixing a portion of your loan, your repayments will be scheduled over the period and you’ll know what to expect, while leaving a portion of your loan floating will enable you to increase your repayments or make one-off additional repayments without penalties.
• You want to spread your risk equally. This is pretty self-explanatory – splitting the risk means having your cake and eating it too.

There’s more than one way to structure your mortgage, and choosing the right structure for you will get your money working for you in a more positive way. Even though a home loan is a long term commitment, there are still plenty of reasons to make changes to your home loan that you will benefit from in the short term too.

The decision to fix, float, or split between the two will come down to what you want for your short to medium term cash flow, how much risk you are willing to take, and your long term home loan goals. If you’re still unsure about what would work best for you, you are welcome to contact the team at Sam Kodi.

Always broke? Never really know how much money you really have, or understand where your money has gone? It’s an easy problem to fix with these six steps.

For many people, sticking their head in the proverbial sand is their preferred method of money management. Crossing their fingers and hoping their card is accepted at the tills is their budgeting strategy. Is this you?

If it is, a few simple tricks will help you out of the red, demystify your finances, and make the prospect of money management far less scary. Are you guilty of any of these bad financial habits?

1. Do you avoid looking at your bank account?

Does the thought of seeing your bank balance fill you with terror? Do you go to buy groceries and get declined when you go to pay because you literally have no idea how much money you have?

Force yourself to check your balance regularly, perhaps even daily. Not only will you know how much money you have, but you’ll be less inclined to spend it. Knowing you’ll see that corresponding drop in the balance is a good deterrent to over spending.

2. Do you not have a budget or track your spending?

Do you have no idea where your money goes? You get paid, and then whoosh, it’s gone? This is dangerous because you end up spending way more than you should.

Budgeting seems like such a drag, but if you do it right, it’s not. It gives you freedom to spend up to a certain amount, and plan how you’ll spend your money. Try downloading a budgeting app and see if that works for you. Also, have a tiered bank account system, where you can transfer a set amount of money to one account and have that as your spending money.

3. Do you have a balance on your credit card?

Credit card companies make millions – billions – of dollars a year on interest. That balance that rolls over every month, you’re paying 20% interest on. That money is far better off going to a much better cause- you. Not some rich bank.

If you can’t afford to buy something this month, don’t buy it. Save up and buy it next month. And always pay off the full balance of your credit card every month.

4. Do you spend all you make (or more than you make)?

Are you living paycheck to paycheck? Got $2 to your name the day before payday (enough for a scoop of chips!)? This way of living can very quickly turn into a situation where debt spirals out of control.

Live below your means. Don’t take the expensive rental and try to justify it. That $10 bottle of wine is perfectly adequate. No, you shouldn’t buy your lunch every day.

Once you’ve established good habits of spending less than you make, it becomes a baseline you’ll stick to forever. And your savings account will thank you for it.

5. Do you dip into your savings?

That beautiful dress, that’s ok to buy from savings, right? As is a new drill. And a splurge to go out for dinner and a concert. The more you dip into your savings, the less will be there when you genuinely need it. And you slogged away to save it in the first place, your past self would be so annoyed at you frittering it away.

Don’t touch savings- emergency or retirement- unless there’s something terribly wrong. Create barriers between you and your money; invest it in a fund or put it in a high interest account that penalises you for withdrawals. Make it difficult to access—your future self will thank you for it.

6. Do you only save what’s leftover?

It’s pretty common for people to spend what they want each month and then save what’s leftover at the end. You pay rent, the bills, the groceries, a few purchases here and there and et voila, you’ve managed to save $10 this month.

Instead, you should prioritise yourself. Set up an auto payment on the first day after payday, and have money disappear into savings. 10% is a great amount to start with, and you can increase that over time.

Don’t leave your financial future to chance

Do you ever look back at your younger self and think ‘why did you do that’? Most people have a moment where they wonder what on earth they were thinking. Conversely, do you ever thank yourself for making awesome choices?

This is one of those awesome choices. Saving money and setting your future self up for future success is an amazing gift. Giving yourself the freedom to buy a home, travel, or have a restful retirement is priceless. Your future self also thanks you for contacting Sam Kodi to help sort out your finances—he’ll help you make the changes you need for success.