5 simple tips to help keep your mortgage on track.
Maybe you are making your mortgage repayments but finding your bank account is being stretched every month. There are some things you can do and action you can take to keep on top of your repayments.
1. Take a close look at your repayments
Look at your mortgage repayments and do the “what if” test. Scenarios can change.
What would your repayments be if the interest rate goes up? Would you still be able to afford them? What if you or your partner lost your job? Do you have a buffer of savings you could draw on?
Could you still make your repayments?
2. Create a budget and stick to it
Make a budget to monitor your spending and help you to keep up with your mortgage repayments, stick to it and adjust it as your financial situation changes.
Stay in control.
See how to do a budget for tips on what to do and how to get help putting your budget together.
Whether you are trying to pay off your home faster or save up for an overseas holiday, a budget will help you to set a goal you can work towards.
Here are some goal-setting rules to follow:
- Be specific – work out exactly what you want and why
- Be realistic – don’t make your budget so tight you won’t be able to stick to it
- Stay motivated – set yourself a time frame to accomplish your goal
3. Speak to your broker / lender
If you are struggling with your repayments, talk with your broker or lender about it. The lender must assess and respond to your request within a set amount of time.
It can be stressful and embarrassing to tell your broker or lender when you are having trouble with mortgage repayments. You might be worried telling them will have a negative result, but you need to get over this sooner than later, as you will find that financial hardship can happen to anyone and it is important to take action quickly before the problem gets worse.
Yours problems might be short term and sorted out fairly quickly, your lender can help you by changing the terms of your loan. This is called a ‘hardship variation’ – see how to apply for a hardship variation. Depending on when you took out your loan, there are different thresholds (maximum amounts allowed) for accessing a hardship variation – see hardship threshold.
Here are some of the options you could discuss with your broker / lender:
- Extend your loan period, so you make smaller repayments over a longer period
- Postpone your repayments for an agreed period
- Extend your loan period AND postpone your repayments for an agreed period
- Other ways to make your loan repayments more affordable
If your problems are long term and your circumstances are unlikely to change then the lender may permanently agree to change your repayments. Just keep in mind that this will increase the total amount you will have to repay, as you will pay more in interest if you choose to pay off the loan over a longer period of time.
4. Don’t be afraid to ask for help
If you are unsure what to do or are having trouble getting the results you want, confidential help is available from a financial counsellor.
5. Some things to watch out for
If you are struggling with your mortgage, and things are not getting better, watch out for the tricks that maythere are some strategies that may not be an instant fix and could even make your situation worse:
- Borrowing more money or using your credit cards – If your existing loan is already becoming unaffordable, you don’t want to get yourself deeper into debt. See trouble with debt.
- Borrowing from family and friends – While this may work for some people, it can add to your debts plus you’ll have the social pressure of owing money to your loved ones. See loans involving family and friends.
- Refinancing or consolidating your debts – If you are thinking about rolling all your loans into one, know the risks involved and watch out for hidden costs. See debt consolidation and refinancing.
- Switching home loans – Be aware that it may take some time for you to recoup the costs of switching. See switching home loans.
- Accessing your super – You can only do this in limited circumstances. This is a last resort and should only be considered if it will save your home. See getting super early.
Don’t struggle in silence. If you start to have difficulty with your mortgage, approach your broker / lender as soon as possible to discuss changing your repayments.
Contact us for a FREE Mortgage Health Check today!