Newspaper article The Daily Mercury (Mackay, Australia)

Got Mortgage Stress? Allocating a Budget Helps Aussies Avoid Getting into Too Much Debt and Pay Their Home Loan off Sooner

Newspaper article The Daily Mercury (Mackay, Australia)

Got Mortgage Stress? Allocating a Budget Helps Aussies Avoid Getting into Too Much Debt and Pay Their Home Loan off Sooner

Article excerpt

salestalk

with Vikki Berardi

ALMOST two out of three Australian homeowners allocate 40% of their weekly household income to paying their mortgage.

Another 19.5% of Australians devote more than half of their take-home income to their home loan.

Based on the Australian Parliamentary Library definition of mortgage stress, it refers to a situation where homebuyers are paying more than 35% of their income on home loan repayments.

The basis for the above definition of mortgage stress is the general rule financial institutions will not allow a household to take out a housing home loan if the monthly home loan, calculated over a 25-year term, exceeds one-third of the monthly household income.

But not all households paying 35% or more of their income in loan repayments are necessarily experiencing stress. Some homebuyers, especially those on higher incomes, may be voluntarily paying more than 35%.

Statistics gathered the Australian Government show one-third of mortgagees define themselves as being under mortgage stress. The research raised a few tips for others who find themselves under pressure to make their mortgage repayments.

They include:

Redo your budget

You should reassess your budget regularly; once a year is nowhere near enough if you have a variable rate home loan. It is a good idea to revisit your budget every couple of months and any time you think you may need extra spending money such as during holiday periods. Yesterday's budget landscape is different to today's and tomorrow will bring more changes. Do you really know what your expenditure has been, is and will be over the next three months? What costs you can save on and what extra spending will arrive with celebrations and festivities? A budget is there to be followed, consider all possible activities the short and medium term will bring then cost them in now. …

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