Once you’ve secured a mortgage, it’s important not to just ‘set and forget’. You need to spend some time managing it to make sure it continues to work for you. Good mortgage management can help you save both time and money on your home loan, and also avoid or manage mortgage stress when things don’t go quite as planned.

Mortgage stress can affect anyone, regardless of where you live or how much your property is worth. 

Although interest rates do play a part in creating mortgage stress, more often than not the real cause lies with an unexpected life event; unemployment, illness, injury and relationship breakdown are some of the most common causes of mortgage stress. Here are our top strategies for managing your mortgage and paying off your loan faster.

Preventing mortgage stress

The best solution for managing mortgage stress is to put in place strategies to avoid it altogether. Two key areas that can help you manage your mortgage and prevent mortgage stress are:

Sit down and create a good budget based on your current financial situation and goals. Consider what is necessary, what is desired and what is truly waste. Remember, you do need to allow some ‘fun’ money in your budget. Use our budget planner to help you get in control of your finances.

Try to build a ‘buffer’ into your home loan by making additional repayments whenever possible. This will give you some leeway if you do find yourself in temporary difficulties. You can do this either through making additional repayments, or saving additional money into an offset account. Make sure your loan allows for extra repayments without penalty first.

You should also consider life insurance, income protection insurance or mortgage protection insurance when you take out a home loan, to cover you in the event of illness, injury or even death.

Quick tips on easing mortgage stress

If you do find yourself experiencing mortgage stress, or believe you will soon have trouble making your home loan repayments, talk to me straight away. I can then present your case to your lender for consideration. It’s important to remember your lender will only sell your home as a last resort – financially it is better for them for you to keep your house too!

Some options that you may have available to you to help manage your situation when you’re experiencing mortgage stress include:

  • Apply for a hardship variation to extend your loan term, take a repayment holiday, or both. Most lenders offer these.
  • Consolidate debt
  • Refinance your home loan
  • Switch to an interest only repayment option

It’s important to note that not all options will be available. In many cases it will depend not just on your situation but also the lender your home loan is with. There are also likely to be some fees involved, particularly if you are looking at refinancing.

You should discuss your situation with me and other related financial professionals, such as your financial planner and accountant, before making a decision on your course of action. In more extreme cases, you may need to consider selling your home and downsizing/moving further out of town, or returning to renting for a period of time while you get back on your feet. The sooner you make this decision, the better off you will be.

Pay off your home loan sooner

Paying off your home loan earlier than the standard loan term is easier than you think. There are a number of methods you can employ that may help you save thousands of dollars and years off your home loan.

Hardship variations and mortgage repayment holidays
If you are experiencing temporary difficulties meeting your mortgage repayments, you may qualify for a hardship variation with your lender.

Consolidate debt
Debt consolidation combines several loans into a single loan, usually your home loan. Typically, this will include combining unsecured debts such as personal and car loans, credit card balances and store card balances into your home loan which is debt that’s secured by your property.

Refinancing has become very popular in recent times due to the number of interest rate rises. Refinancing can be very beneficial in helping you to save money if used in the right circumstances, but it can be a costly exercise, so you need to do your sums carefully before making a decision to determine whether or not the costs outweigh the benefits.