35 percent of Australians have experienced stress about their mortgage repayments in the last 12 months, due to pay cuts and rising utility bills.
A recent survey by HomeLoanFinder.com.au revealed that of the 35 percent of Australian home owners who experienced stress over mortgage repayments, 15.6 percent were unsure at times whether they would be able to make any repayments at all.
10.4 percent attribute this stress to the fact they were recently forced to take a pay cut, while 9.1 percent struggled with managing a budget.
When it comes to meeting mortgage repayments, the biggest stresses were rising utility bills, lack of job security, and difficulty with budget management.
The results also showed that Australians were willing to make a number of sacrifices to help alleviate the stress of repaying their loans. For instance, 42.7 percent would hold out on a holiday, 29 percent would eat out less and 15.2 percent would go as far as renting out a room in their house.
“Mortgage related stress affects so many of us but there are ways to handle this effectively and not let it take charge of everyday life. Recognising that you’re struggling with repayments is the first step to taking control of the situation,” said Jeremy Cabral, Publisher of HomeLoanFinder.com.au.
“By making some key lifestyle and personal finance choices, Australians can relieve the stress and get their mortgage repayments in order.”
Here are Cabral’s top five tips to help people manage their budget and ease the stress of loan repayments:
1. Create a budget
Creating a budget makes it easier to monitor your costs and understand the money coming in and out of your household.
Think about your priorities and identify what you need for basic living expenses. Then cut back on extras and put them towards your mortgage repayments.
2. Meet with your bank
Set up an appointment with your bank and explain your financial situation and that you are experiencing hardship in repaying your home loan.
Discuss the following options with them to see if they can offer you a solution:
a. Negotiating a lower interest rate on your home loan.
b. Asking your lender for a hardship variation to temporarily reduce your payments or postpone your payments for an agreed period.
3. Temporarily change how you pay your home loan
If your credit rating has taken a hit recently, you might want to hold off a complete loan refinance as you might not be able to switch to the best loan for you right now.
Instead, you can switch your payment type on your loan to interest only, if that’s an option from your lender. Consider it a temporary reduction in your repayments until you sort out your financial troubles.
4. Shop around
Research online and talk to other financial institutions that might be willing to offer you a better deal. It is crucial that you calculate whether the benefits outweigh the penalty costs you might have to pay for switching.
5. Pay extra
Paying a little extra each month on your mortgage can make a huge difference in the long run. If you find that you have a little extra room in your budget, put that towards your mortgage repayments.