How to be a mortgage warrior… not a mortgage worrier.

- By Nicole Jankovic

Recently, Australian millionaire Mark Bouris shared his own traumatic experience with mortgage stress. It was the 1990s, interest rates were skyrocketing and he had to sell his family home. Sharing this has resonated with followers and news broadcasters alike because it appears that many are facing a similar fate.

The purpose of rate rises; both from the RBA and individual lenders are complex. This article does not aim to delve into the motivation or rationale behind such movements. Instead, I’m sharing helpful methods for managing the onset of mortgage stress in your household.

1. Understand your commitment
   Get to know your loan. Are you paying the minimum amount right now? Do you have an offset account helping you reduce interest payments? Is your interest rate fixed – and if so, when will that be reviewed? Loans are like houses, they are full of unique qualities and it’s vital that you understand your own before you can manage it effectively.
   

2. Cut the fat
   Not physically – financially. Complete a household budget and identify areas that you could reduce expenses / increase your savings. Even if you don’t act on those tightening measures now – this will help later if your mortgage payments become uncomfortable. I highly recommend the budget planner available at MoneySmart.gov.au for tracking your expenses.
   

3. Take advantage
   If you haven’t contacted your mortgage provider, insurance providers or phone service provider and asked for a discount then you’re not really trying. Blunt as that may sound, “lazy tax” makes companies millions every year due to consumers not haggling or reviewing their premiums. Make the phone call, ask if there’s anything that can be done to reduce your charges and see what happens. Tip – approach the discussion as though you are willing to take your business elsewhere if the outcome is not in your favour. Remember that the company wants to keep you (and your fees) for themselves.
   

4.  Protect yourself from the unknown
   Your biggest asset is your ability to earn an income. So we want to protect that income from life’s unknowns. Commonly this is achieved via Income Protection cover, Trauma / Critical Illness insurance and Permanent Disability insurance. When held correctly, insurance provides the saving grace when it comes to keeping your home in the event you cannot work. Find out what you have and seek quality financial advice to determine whether it’s appropriate for you or not.
   

5.  Be honest
   Perhaps you’re nearing the point where 1, 2, 3 and 4 aren’t enough and the mortgage stress is already very real for you. Share what you’re thinking with your spouse, friends, family and even professionals trained to assist you in navigating this exact situation. There might be solutions you haven’t considered and importantly support you’re not currently getting. Talking about your experience is vital to minimising the impact financial stress has on your wellbeing and your living arrangements. Contact your mortgage provider – they may have some flexibility surrounding repayments that you’re currently unaware of.

Rising interest rates impact all of us; mortgage holders or not and we see this in the cost of living increasing in most areas of our life. Take comfort knowing you are not alone in this and shouldn’t be left to feel that you are. Australia has a National Debt Helpline 1800 007 007 and MoneySmart.gov.au also provides information about where you can seek professional assistance and strategies for debt related concerns. Hopefully with these tips and ongoing support you will come out the other side a mortgage warrior… not a mortgage worrier.