Facing mortgage<\/a> stress \u2013 when a household\u2019s income doesn\u2019t cover its outgoings, including mortgage repayments \u2013 is a scary prospect, but with good planning, it can be avoided.<\/strong><\/p>\n John Tindall, of Accumulus Home Loans<\/a> in Sydney, says many Australians with mortgages fail to plan well, if at all, for potential interest rate rises or changes in financial circumstances , which can both impact the ability to pay a mortgage.<\/p>\n Facing mortgage stress is a scary prospect. Picture: Getty<\/p>\n<\/div>\n He says understanding your true financial position, making additional payments, having an offset account or fixing interest are just some of the ways to avoid mortgage stress.<\/p>\n Tindall says lenders<\/a> and mortgage brokers use income information and estimated expenses to ensure applicants can afford the loan they\u2019re applying for.<\/p>\n \u201cIn fact, they\u2019re doing it at interest rates of 7-7.5%, effectively \u2018stress-testing\u2019 your ability to repay,\u201d he says.<\/p>\n \u201cBut understanding your own \u2018ins\u2019 and \u2018outs\u2019 is important in case you need to adjust, so we give our clients a family budget spreadsheet to help manage their finances,\u201d Tindall adds.<\/p>\n A budget will help understand the \u2018now\u2019 so the future can be better managed.<\/p>\n \u201c(With a budget), if difficulties arise, then adjustments to a loan and or lifestyle can relieve the stress,\u201d he says.<\/p>\n Making additional repayments is an excellent way to get ahead of normal repayments, with the added benefit of reducing interest, Tindall says.<\/p>\n \u201cOffset accounts are another example, however they can be a little too accessible at times.<\/p>\n \u201cSome lenders may also allow you to take a repayment holiday if the circumstances are right, such as a critical illness or a new baby, but it\u2019s a case-by-case basis,\u201d Tindall says.<\/p>\n Offset accounts are a great solution to avoid mortgage stress, although they can be too readily accessible. Picture: Getty<\/p>\n<\/div>\n A fixed interest rate is a great way to provide certainty of repayments, particularly with interest rates currently at record lows, he says.<\/p>\n \u201cBe careful though, as there is often a limit on additional repayments and offset accounts, meaning there is less flexibility as well.\u201d<\/p>\n
\n <\/p><\/div>\n Realestate au <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"![\"mortgage](\"https:\/\/i0.wp.com\/www.realestate.com.au\/blog\/wp-content\/uploads\/2017\/10\/18003411\/mortgage-stress_2000x1500.jpg?resize=2000%2C1500&ssl=1\")
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