Depending on which side of the fence you are on, the recent interest rate hike, and the threat of more to come, is either a boon or an absolute curse.

When rates rise, like anything, there are winners and there are losers. The clear winners in this months rate rise are those who have invested in funds or interest bearing accounts, in particular pensioners, as their income increases with the increasing rate.

Which leaves the othertwo thirds (those with homes with mortgages, and those that are trying to get into a home) as the obvious losers.

But lets look at this a bit closely, as in every adversity, there lie opportunities.

For the ones that are trying to get into a home, the advantage is clear…property prices are highly likely to come down further as those selling start accepting lower prices for their property, so that they can quickly get rid of the noose around their necks.

The best part is that now many lenders don’t even require genuine savings to give you a loan, as long as you have 3% by whatever means, and you satisfy their lending criteria, you are in your own home in no time.

How can those holding mortgages benefit?

The answer is pretty simple: refinance to a cheaper mortgage, and preferably fix a portion of the mortgage.

Now, before you rush out and start talking to all those lenders out there, a word of caution: when you refinance, there are costs involved, so do your sums so that you can clearly see when and how soon you will be able to recoveryour costs, as opposed to the benefit you will derive with the lower rates.

Here are several things to consider:

• Are there any exit fees with your current loan?
• Have you talked to your current lender first?
• Will your property value up to the loan amount?
• Will you have to pay mortgage insurance?
• Will the costs justify the move?

Once you have clear answers to the above, it would be evident whether it makes financial sense to refinance or not.

If you are refinancing, it would be a good idea to explore consolidating all your debts to the one loan, and have the one simple monthly, fortnightly or weekly repayment.

For further information and free assessments of cost to changeover benefits, call the author, Victor Kumar on 1300 302 166