Some borrowers are becoming stressed about their mortgage and there are a number of factors contributing to this. See what they are here.
Borrowers are becoming more stressed about their mortgage and there are several factors contributing to this.
According to the Genworth Homebuyer Confidence Index, higher cost of living, unemployment/redundancy, other debt obligations, fewer hours worked, illness and interest rate rises are the main concerns affecting borrowers.
So how do you overcome this stress and meet your home loan repayments? We have listed five simple, yet effective, tips that can help you. However, as everyone’s situation is different, it is vital that you speak with your lender and financial advisor to ensure you are making the best decision for you.
When you first applied for your home loan, you may not have paid much attention to the extra features. However, these extras could be costing you a lot more than you think. Take a moment to research loan features, write down the ones you want and speak with your lender or a different lender to find a better loan for you. At State Custodians we can answer any questions you have on refinancing and have award winning loans such as the Breathe Easy Offset and the Standard Variable Offset home loan to help you compare.
Many banks may be open to negotiation; all you need to do is ask. If you have been with your bank for several years, they may offer their long term customers better deals. You may also be able to negotiate the interest rate on your loan. The mortgage industry is extremely competitive, so lenders will work hard to keep you as their customer, which puts you in the driver seat.
Although interest rate drops can reduce repayment amounts, the best way you can take advantage of interest rate drops is to maintain your existing repayments. This way you are making extra repayments and can pay off your mortgage faster, saving thousands in interest over the life of the loan.
According to the Genworth Homebuyer Confidence Index, employment concerns are the second highest contributing factor to mortgage stress, so it may be worth considering taking out insurance to protect you and your family. Income protection and life insurance will assist you if you are unable to work due to illness or injury. However, as this is another expense, you need to ensure you are able to budget for these additional costs.
Review Your Budget
According to the Genworth Homebuyer Confidence Index, higher cost of living is the biggest concern for borrowers, so this tip is probably the most important to consider. You need to constantly review your budget to allow for the rising cost of bills and expenses. You also need to be strict – although you may want to buy that new 60 inch TV, is it worth falling behind in your repayments? Also avoid entering into other debt obligations such as personal loans as it potentially can bring you further behind financially.