Up to 1,000,000 (one Million) home owners to hit ‘mortgage stress’ by years end!

Up to 1,000,000 (one Million) home owners to hit ‘mortgage stress’ by years end!

mortgage now web page banner

That is a troubling headline.  Imagine that, one million families in by Christmas 2008.

What is Mortgage Stress?  That depends who you ask.. The best answer i can work out is if it hard to find the money to pay the mortgage (and everything else) then you are probably in mortgage stress.

Its all well and good to know what mortgage stress is, but what if YOU are the one in the stress..

What can you do about it?

That depends on your personal circumstances.  A few things you could look at in general are:

  • do a and look at reducing your expenses.
  • look at ways to generate more income
  • your home to consolidate debts into one payment
  • sell your home

There are good points and bad points to all of these options.  Lets look at them one at a time.

Firstly,

  • do a budget and look at reducing your expenses.

You can look at doing a simple budget (get a simple worksheet here ) and try to work out if you have any areas that could be ‘trimmed’ a little.  My experience tells me that almost NO ONE likes doing a budget and even less people actually follow the budget they develop.

If you spend the time to go through your expenses, you may as well follow through and try to impliment the savings you find.

Secondly:

  • look at ways to generate more income

Perhaps only one of you is working (in a couple).. Perhaps you could ask for a pay rise.. perhaps you could take on a part time job.. perhaps you could turn your hobby into a small business.. perhaps you could sell products and or services on the internet or ebay?

These things are all ways others have generated additional income.  The down side is all of them reduce the amount of time you will have to spend with your family.  The work / life balance is something you need to be aware of and you’ll need to try to maintain that balance.

The upside is even an extra $100 per week can make a massive difference to a family budget.  worth thinking about..

Next:

  • refinance your home to consolidate debts into one payment

This can often be a winner but watch the costs and the long term repayments.

I have seen clients save more than $1000 per month in repayments when they refinance their home and pay out all of those small loans and credit cards.  They end up with one payment (the mortgage) and they often free up so much money they can begin to save and have a life once again.

It all sounds great (and it is) but what is the down side here?

Be careful of refinancing, paying out all of the bills and then using the credit cards and running up the bills again… you may end up in worse trouble that you started in.  The best bet is to refinance  and then cut up all bar one small ($1000) emergency credit card.  When your credit card company sends you a ‘pre approved’ credit limit increase.. throw it in the bin… don’t say yes.. most people do and most people are in a lot of debt… you do the math..

The other are of concern is the long term effect of taking a $5000 credit card and putting it onto the home loan.. It will save you money out of your pocket each month, there is no doubt about that… But it may cost you a lot more in the long term, don’t forget that you are now paying this $5000 debt off over 30 years… there is a lot of interest in that 30 years..

BE AWARE!

If you can control your spending and you put extra money into the home loan every month, you will end up saving many thousands (possibly hundreds of thousands) of dollars in interest and possibly cut the 30 year loan down to as little as 12 years or so (even better in some cases).  This does mean you cant get a new big screen TV every six months but the savings make it well worth it.

 

And lastly:

  • sell your home

This can actually be the best option in some cases..  recently i had a client that had been through a nasty separation and her partner was the main income earner.  She was left with the family home and the debt.  He had not made payments for a while and now the bank was threatening to .

We went through her options and while she could have refinanced, she would have struggled and one or two interest rate rises would have meant disaster…  She decided it would be better to sell the home as it had a lot of equity and she could walk away with a couple of hundred thousand dollars in her pocket and time to look around..

Her plan was to sell up, rent for a while and look for a cheaper home.  She and the kids could buy a new home with a large deposit and not have to borrow near as much as before and her monthly home loan payments would be a lot lower.

sometimes selling can be the right option, just be aware of the agents commissions and the legal fees when you sell and the mortgage fees and the legal fees when you buy again.

 

Lets hope things turn around sooner rather than later. 

What ever happens, Please feel free to call my team at Mortgage Now or Pro Legal if you need a helping hand.

 

I am and this has been my comment

Graham can be contacted at

, 246 Stafford Road, Stafford, Qld.  4053 www.mortgagenow.com.au

or call TOLL FREE 1300 667-239

Graham built Mortgage Now from the ground up to become the largest Mortgage Broker in Australia in under 5 years and now has 11 different businesses that all on helping people in trouble.

Grahams latest project is the development of The Now Foundation, a self funded charity focusing on the little things we can do to improve our lives in big ways.

Related posts

You must be logged in to post a comment.

%d bloggers like this: