This is a phenomenon known as mortgage stress. If this is you, there are steps you can take to reduce mortgage stress - and the earlier you act if you're in this situation, the better. So here are some tips for reducing mortgage stress in your life.
Tip 1 - Talk to your ban
Why not go and see your bank manager and ask if he or she can offer you a better home loan rate than you're currently getting?
You might find your bank is willing to offer you a reduction to your rate of a quarter of a percentage point or more - which will add up to considerable savings over time, depending on how much you have borrowed and the life of the loan.
There's no harm in asking - and as the old saying goes, no hide, no Christmas pudding.
Tip 2 - Think about refinancing
A common strategy to reduce your mortgage payments if you are under stress - if, for example, you have lost your job - is to refinance your loan. Perhaps you are currently paying off both the principle and interest associated with the loan.
If you're really struggling it might be worth just paying off the interest and not the principle for a short period of time, just until you get back on your feet. If you want to go down this path it's a good idea to get professional advice to make sure this is the right approach for your individual circumstances.
Tip 3 - Shop around
It's also worthwhile talking to other financial institutions about whether they can offer you a better deal than your current lender.
You'll need to work out whether the cost of any penalties you will need to pay to switch lenders is not outweighed by any gains you will make in reduced mortgage payments.
But if the benefits outweigh then penalties this might be a sensible approach to consider.
Tip 4 - Make extra payments when you can
To reduce the risk of mortgage stress in your life it's a great idea to make additional mortgage payments when you can to give yourself a buffer in case you do find yourself under financial duress.
This buffer will give you real peace of mind if you ever lose your job or incur extra expenses that threaten your ability to pay your mortgage.
Tip 5 - Consolidate other debts
To increase the total funds available to you it's a great idea to consolidate credit card and other debts like personal and car loans.
By doing this you will reduce the interest payments you have to make each month, funds that can be redirected to paying your mortgage.
The great Australian dream of home ownership can sometimes seem tough to realise.
But if you follow the steps above, you'll reduce the chance of mortgage stress impacting your life and you might even pay off your mortgage sooner than you think.
