There is panic in the media following the release of the most recent inflation figures. It is almost a certainty that interest rates will be increased later this week and probably at least once again before the end of 2006. Many home owners are still coming to grips with the most recent increase in May 2006.

Clients are consistently asking us what they should do to protect themselves from future rate rises. There is no simple answer and some decisions are nothing more than a calculated gamble. As a response to all the concerned Aussie Home owners here are some useful tips on how to stay ahead of the rising interest rates.

1. Take the anticipated rate increases into account

You have probably heard it all before but Budget Makes Perfect. Before you plunge into a property purchase or property refinance, take out a home renovation loan or decide to buy a new car, please take some time to consider whether you can afford this expense. We strongly advocate that you draw up a detailed budget. In this budget you should factor in possible interest rate increases.

It is no good committing yourself to a loan which you can afford today but can no longer afford if the rates move up. It would be prudent to check the affordability of your loans if the rates were to go up by as much as 2 percentage points. By knowing what you would need to do should the current rate hike continue you may well protect yourself from loosing your property in the future

2. Review your current loans

You may have a number of loans including credit cards, personal loans and the like. Generally these come to you at a much higher interest rate than the rate you are paying on your mortgage. If you are looking for ways to save interest costs, the easiest method is to consolidate all your outstanding unsecured loans into your mortgage. Admittedly this is not always possible. To take advantage of such debt consolidation you must have sufficient equity in your home.

3. Save some deposit

Despite all the offers in the media for No Deposit Home Loans, it is not the best idea to act on these. We are not in a buoyant property market now and every dollar you manage to put together towards your deposit will make you home loan repayments more affordable. Remember, every dollar you borrow attracts interest, so the more you save the better prepared you are when rates rise.

4. Consider a basic no-frills loan

Look around at the available loan products. If you have had your home loan for some time you may find that the Australian Home Loan market has grown and offers a range of flexible loans to suit most borrowers. A basic variable home loan can save as much as one percent off the standard variable rate. These products are limited in features, however if all you are after is cutting your rate down as much as possible a no frills loan may be the answer.

5. Fix the rate

Although the best time to fix your mortgage rate is probably behind us, it may still be possible to lock in all or part of your loan for a competitive rate.

Fixed rates are great if you worry about the interest rates getting out of control. By fixing the rate you need to pay on your mortgage, you gain greater certainty over repayments and minimise the impact of further rate increases ahead. The fixed rates offered today tend to reflect what economists believe will happen to the variable rate in the future. If there is an expectation that the variable rates will be going up the current fixed rates will be higher than the current variable rates. Hence fixing the rate becomes a sort of a gamble that by paying more today you will save more tomorrow.

6. Increase the frequency of your repayments

One of the easiest ways to pay off your loan sooner (and cut your interest bill) is to increase the frequency of your repayments. You may choose to move from monthly to fortnightly repayments. Fortnightly repayments reduce the principal, giving you more equity and ultimately, lower loan costs.

7. Set up a Line of Credit

One of the best ways of securing yourself against future rate rises (or any other financial eventuality for that matter) is to set up a line of credit against your property.

Line of Credit or Equity Loans as they are also known, have gained great popularity of late. These products make it possible for borrowers to pay extra on their home loan and "redraw" it when needed. You may just find that having access to an extra five or ten thousand dollars will make it easier to hold on to your mortgage in the event that your repayments are increased outside of your initial budget.

If you would like to learn more about how to protect yourself against future interest rate rises please visit www.webdeal.com.au or www.honeyloans.com.au