How to combat home loan stress
With most home loans stretching over a period of 30 years, at one point or another, mortgage holders are likely to experience stressful financial periods. And to add to it, interest rates will almost certainly fluctuate significantly over the life of your loan. Just look at how things have changed in the last 10 years. In 2007, I remember when interest rates peaked at just under 10 per cent - today they generally have a 4 in front of them.
So, what can you do to help overcome mortgage stress?
Talk about it
First of all, don’t be afraid to talk to your bank or broker. Banks can help if a person is in genuine hardship. If you’re stressed financially through no fault of your own, have a quality discussion with your bank - and the earlier you do it, the better. If you’re feeling uneasy about it, your mortgage broker can help guide the conversation. Or even better, a mortgage broker may be able to find you a solution before genuine hardship really sets in.
If you are trying to prevent mortgage stress in the future, a long-term fixed rate may be worth considering. This option puts a ceiling on your repayments. You can lock it in for up to five years and it gives you the knowledge of what you have to pay each month for the long term, which can help you plan your household budget.
Don’t cut corners
Protect your debt
And don’t rule out loan protection plans. Have you thoroughly examined your options? There are basic insurances that can protect you - and your mortgage - in the event your life changes and you can’t meet your payments.
Again, speaking with a professional is the most important step, no matter what direction you’re heading in. They can provide you with more knowledge that enables you to make a more informed decision.
For more information, please call Trevor on 0429 022 888.