How to beat mortgage stress

Managing your mortgage can help you pay off your loan sooner and alleviate the mortgage stress that any property owner can run into at some time. The cost of living and interest rates can rise, your earnings or the value of your property can change, all these can put a strain on your ability to make your repayments and lead you into mortgage stress.

Our property experts have summarised these tips for managing mortgage stress so you can lighten the pressure and ease the demand on your income.

Review your expenses

Put all your expenses into a budget and analyse where your money is going each month. Take a good look at your expenses and assess each item. Do you still need this? Can you get a better deal with another provider? Can you reduce your consumption on this item? Even a small amount can add up over several items.

‘Calculate your annual cost for each expense,’suggestsAsh Brown, Director of One Agency Orange. ‘A cost that doesn’t seem much per week or month can add up to hundreds of dollars over the year. Working out your annual cost gives you a better view of what you’re actually spending. It helps you assess if the value of that item is worth what it’s costing you.’

The simple ways to reduce your expenses are often the best: buy your groceries at a cheaper shop, take your spending money out in cash and only spend that amount each month, shop from a list you wrote up before leaving home. Write up a budget and stick to it. A sensible, practical approach to the way you spend money can reduce your emotional and spontaneous spending, and save you a lot of money over the course of a year.

Accumulate and record your savings

Savings can be actual money you’ve put aside in the bank and also the money you’ve saved by reducing your expenses. Of course, savings in the bank is better but don’t discount the feel-good aspect of calculating how you’ve saved on expenses and the encouragement it gives you to save more.

By calculating your savings on expenses, you also know how much money you’ve freed up in your budget so you can make a firm decision on where those savings will be redirected.

‘You can’t make progress in saving money if you don’t keep a record of it,’ says Ash. ‘So be diligent in keeping track of your expenses as well as where you’ve saved money.’

Save as much money into your bank account as you’re able to. It can help you pay off your mortgage sooner, be a buffer in case times get tighter, or even be used as a reward after all your hard work in reducing your expenses.

Look for a better deal

It’s well worth your time to research other options available to you for insurance, power and other monthly expenses to see if you’re getting the best deal. A lot may have changed since you took out your initial contract with these providers. Information on current market deals is valuable to have if you want to negotiate with your current provider too, including your bank.

‘So often, people don’t think to talk to their mortgage provider about giving them a lower interest rate,’ says Ash.

‘If you’ve been a good customer for years, you pay your mortgage on time, and you’ve built up equity in your property, it’s well worth using these to negotiate a better interest rate on your mortgage. It’s much easier than refinancing too.’

It is also a great idea to investigate government and council rebates to see if you are eligible for assistance. The rules change over time, so take another look and see if this is another way you can save money.

Know your property value

This may be a good time to check in with your real estate agent on the current market value for your property. This information is vital if you want to talk to your mortgage provider about options. 

A sales agent will be able to appraise the property, provide comparables, and give you an estimate of what the property may sell for in the current market conditions. This can give you a more informed decision of what your property is worth and help with making budget decisions now and in the future. 

A word on refinancing

If you want to look at refinancing your mortgage, be aware that there are costs associated with this, so make sure you ask your bank what all the costs will be.

‘Refinancing involves closing down one mortgage and setting up another’, says Ash. ‘That means you’re up for government fees to discharge the current mortgage and start a new one.

‘Your lender is also likely to charge fees to discharge a mortgage if you go to another provider, so be thorough in your research and ask lots of questions.’

Need more advice?

If you are managing mortgage stress, talk with your provider or financial advisor for solutions to stay on top of your regular payments. They should be able to offer a range of options for you based on your income and expenses.

‘And remember, there are always going to be some things you can’t control, like the economy,’ advises Ash. ‘Taking even a small action can help ease the stress of financial pressure because you’re seeking out the things you can do and acting on those.’

If you need advice on your investment portfolio, you can email our Senior Property Manager, Simone Fogarty or call her on 0423 597 934 for a chat about our Investor Support Service. We’re Orange’s friendliest and most energetic agency. Our service is all about making your real estate experience as stress-free as possible.

General Advice Warning

The information contained in this blog is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making an investment decision in relation to a financial product (including a decision about whether to acquire or continue to hold).

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