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Tips for Building a Buffer into Your Home Loan

Tips for building your future

With interest rates at an all time low in Australia, many families are taking advantage by building a buffer into their home loan to give themselves extra peace of mind. Here’s how they’re doing it.

When you buy your own home, you also take responsibility for the loan that accompanies it. With so much change in the average household – from starting a family to changing jobs, external fluctuations in the economy and the possibility of interest rate rises – it’s crucial to build a buffer into your home loan to prepare for times when circumstances might change.

Making repayments

If you have a variable rate home loan, instead of reducing your monthly mortgage payments as interest rates fall, one way to build a buffer into your home loan is to keep to the same repayment schedule, meaning that you pay off the loan more quickly. Alternatively, you could make additional lump sum repayments into your mortgage and get ahead of your repayments for when times are tight.

If things do change – for example, a series of future interest rate rises – you will be prepared and have built a buffer into your loan. You could also have cut your loan by many years and saved thousands of dollars in the process.

Paying extra into an offset account

Another way of building a buffer into your home loan is to regularly save additional money into your offset account, reducing the amount of interest you’ll pay on your home loan, but also growing an emergency nest egg to access when you need it.

This is a useful strategy regardless of which way interest rates move and can give peace of mind against external changes outside of your control.

Borrowing a realistic amount

Make sure you don’t overstretch your finances by only borrowing an amount that you can realistically afford to pay back.

Consider your budget and current situation, and then apply for a home loan amount that takes these things into consideration. If you are stretched when interest rates are low, you could be in danger when they start to rise. Don’t rely on rates staying low or on future pay rises.

Ensuring flexibility with your home loan

Ensure your home loan has flexibility to allow you to make extra repayments, a redraw facility and even the ability to switch from a variable rate to a fixed rate for the coming years.

You should seek advice around the types of mortgages you can get or find out what features and options are in your existing home loan.

Building a mortgage buffer is much like preparing for a worst-case scenario. It may never happen, but you can’t put a price on peace of mind and a sense of satisfaction that you have a safety zone built into your existing home loan, or simply extra cash to play with if you need it.

If you’d like to talk to us about setting up a home loan with Qantas Credit Union, call us on 1300 747 747 or find further information at

Qantas Credit Union

The information in this article is of a general nature and does not constitute advice. It has been produced without taking into consideration your personal financial circumstances, objectives or needs. Prior to making any decision you should conduct your own investigation and analysis of any benefits or costs associated with such. You should seek your own independent legal and financial advice. You should also read the Product Disclosure Statement (PDS) available on our website before applying for financial products and services. Normal lending criteria apply to credit applications. Terms and conditions apply and are available on request. Qantas Staff Credit Union Limited trading as Qantas Credit Union ABN 53 087 650 557, AFSL/Australian Credit Licence 238305.