Combating Mortgage Stress

A rising interest rate environment and increased levels of consumer indebtedness is causing more and more borrowers to experience difficulty in meeting their mortgage commitments. With some economists now speculating that more interest rates increases are on the horizon this phenomena is likely to increase.

There are a few simple steps that you can take to avoid entering into a mortgage stress spiral.

(1) Take control of your financial commitments

The most effective strategy for better personal financial management is to set a budget. Don’t discount how effective a monthly budget can be in giving you a financial framework to better manage your finances.

Budgets should not be considered a restraint, but rather a proactive approach to how you spend cash and factor in commitments. If you set an unrealistic budget it’s going to fail; so be practical and allow for some flexibility.

(2) Set financial goals

Goal setting is central to maintaining motivation. The principal reason most people stray from a budget is because they lose sight of where they are going and what they have achieved.

By applying some simple goals to your budget process, such as reducing the amount outstanding on a credit card or reducing personal loans, you can easily see the results, and are motivated to continue or even find new ways to improve your budget.

(3) If your are in trouble – ask for help

If you do not think you can keep meeting your mortgage repayments, contact your lender immediately. Borrowers don’t often realise that there are a number of ways a lender can assist borrowers experiencing hardship if they are given the opportunity early.

Click here to read a case study on combating mortgage stress

Genworth Financial Hardship Solutions Program

Mortgage Assistance Schemes

There is a number of government Mortgage Assistance Schemes available around Australia for people who may be having problems with their mortgage repayments.

Click here for your state government website.