Smartline - Avoiding Mortgage Stress

Avoiding Mortgage Stress

If you’re struggling to maintain regular expenses such as insurance and school fees, cutting down on things like pay TV and takeaways or using your credit cards for everyday expenses such as groceries, then you may be under mortgage stress.

‘Stop. Think,’ advises Mortgage Adviser Maria Manley. ‘Everybody has to save for major expenses like a new car or television, but if everyday expenses are getting too much, then it’s time to take your finances in hand. Talk to Smartline – we can help.’

When you are first doing your mortgage sums, plan ahead. For example, think about what might happen if there were a rapid increase in mortgage rates, if you lost one income, if you had an unexpected child. Would you have the capacity in your income to cover the extra expense, or do you have a back-up plan?

Build a buffer

One way to be ready for an unexpected financial emergency is to make sure that you have a buffer built into your loan. By paying off a little extra every month you build up a cushion to make life a little easier in hard times.

If you borrow to your financial limit, then consider an interest-only loan with an option to pay extra. Pay in the extra whenever you can.

Keep to a budget

A budget can help you take control of your money and make sensible decisions on how you spend it. Start by recording every time that you spend money, from big expenses to small. Without this, you won’t get a realistic picture of where your money is going.

Taking a critical look at what you spend will also help you to make cutbacks that will enable you to pay extra off your mortgage. The more you pay off now, the easier your mortgage will be to manage in the future and this could save you thousands of dollars in interest every year.

Cut down on credit

Credit card interest rates are often very expensive – sometimes over 20 per cent per annum. The best way to use a credit card is to pay off the FULL BALANCE of your credit card each month. That way you benefit from the convenience without paying punishing interest rates.

Use pay rises wisely

Consider escaping this cycle the next time you get a pay rise by putting at least 50% of it towards increasing your loan repayments. That way you are building an asset that may help to make you money in the future.

Phone Maria Manley, Smartline Personal Mortgage Adviser, on 07 3381 9461 or 0411 282983. Visit www.smartline.com.au/mmanley