Everyone can be affected by mortgage stress what is important though is Managing your mortgage stress. Though interest rates play a big role, there are some uncontrollable factors that can contribute such as illness, unemployment and a breakdown of a relationship.
Here are some tips to manage mortgage stress.
Budget – You can help battle mortgage stress by creating a budget based on your goals and current financial standing. Determine the expenses that you need and those that you do not need. You must also provide some room on your budget for miscellaneous expenses but this should not be a big percentage.
Additional Repayments – If you can plan ahead, you should make additional repayments so that you will have some buffer against difficulties that you might have along the way. You may also save money into an offset account so that you won’t have to worry about allotting your salary to repayments.
Life Insurance - here will be incidents beyond your control such as injury or illness, you must also consider applying for a life insurance, mortgage protection insurance or income protection insurance so that you will be covered despite those unfortunate situations.
But if you feel that you will eventually have mortgage stress, you must consult a mortgage broker as soon as possible. After a consultation with the broker, he will present your case to your lender. Lenders would want you to keep your property for it would be financially better for them if it stayed that way.
If you are already under mortgage stress, you may apply for a hardship variation that can prolong the term of your loan, give you a holiday in repayments or both. You may also consider consolidating your debt or to undergo refinancing with your home loan. You can also switch to an interest only home loan to buy yourself time with repayments.
Applying for financial assistance is also a viable option for state governments do assist borrowers that cannot pay due to temporary shortcomings. But in cases of severe mortgage stress, you may access your superannuation which can aid you in repaying your home loan. However, this move entails much consideration for you might end up losing your superannuation and your house.
If none of the options above works, it is time to consider selling your home or downsizing your property. You may also return to renting to buy yourself time to save for another property. You will be better off if you will sell your property as soon as possible.
However, it is noteworthy to point out that not all options can be played out. The option that you have will not only depend on your financial status but it will also depend on the home loan that you are currently in. You must also be ready with additional fees especially for refinancing.
