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Could Doctors Be In For A Big Financial Shock?

Doctors, in case you haven’t noticed yet, banks have started to raise interest rates independent of the Reserve Bank. It has definitely been a big talking point in the media.

Last month’s interest rate rises by the big four banks and other lenders have widened the interest rate gap between owner-occupier and investment loans to more than 0.7 per cent in some cases. Two years ago these rates were identical, but that was before regulators and banks began trying to put the brakes on property investment growth.

To put this in perspective, for every $1m in borrowings and every 0.25% interest rate increase, your repayment will go up by $2,500 p.a.

This may not seem like a lot, but if you are like many doctors, you will typically have a high level of borrowings. You may have bought your home on an interest only loan, as you wanted to stretch your budget as high as possible…

We have explored in other articles that many doctors already suffer from financial stress based on today’s rates, so you have to wonder what will happen if interest rates rise further, which is definitely on the cards in the next few years.

I predict that many doctors are going to be in for a big financial shock, unless you start to plan now.

For those doctors who already find themselves with a significant loan, and faced with cash flow pressures, you should not delay further. Seek advice from your finance broker, financial adviser or accountant. Should you be locking in a fixed rate for all or part of your loans?

For those doctors still in the market to buy a house or investment property, you should budget with much higher interest rates in mind. Always make sure you can pay off your mortgage in 10 years or less. Click HERE to read more.

Please contact us if you would like to review your entire financial position and plan your family’s financial future with more confidence.

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