How to handle HIGHER INTEREST RATES

As mortgage fees bite, it's time to ensure you can keep a roof over your head 

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Do the whopping home loan interest rates have you feeling stressed? Are you struggling to come up with enough cash to cover your payments? You're not alone, according to New Zealand economist Ed McKnight, who recently coauthored Wealth Plan: How to Invest in New Zealand Property and Retire on Real Estate with Andrew Nicol.

"Interest rates have surged from around 2.2 percent all the way to 6.5 percent, so many households are feeling the pinch," he explains.

Here, Ed share's his top tips for homeowners on how to handle the hikes.

DON'T JUST GO FOR THE CHEAPEST RATE

Kiwis tend to go for the cheapest rate possible. After all, it seems like the least expensive, right? If you agree to fix your interest rate with the bank for the next five years, you'll get a lower interest rate than if you fix it for one year. It might seem like a good deal today, but if interest rates fall over the next few years, as some economists suggest, then it could seem like a costly option in a year or two.

SHOP AROUND 

There are not as many people buying houses at the moment, which means fewer people are taking out new mortgages. The banks are fighting each other to retain market share and so are offering you lower interest rates. For example,