Blacktown has recently been identified as the area within Sydney has having the highest percentage of home owners in “mortgage stress” by recent figures published by the ABC News. This has led to an increased number of home owners placing their homes on the market before they can no longer afford to pay for the roof over their heads. The mortgage stress however, is not just limited to Blacktown, with mortgage stress increasing dramatically across all of NSW, Victoria and Queensland since the initial rate rises by the RBA.
Mortgage stress is when a household’s income is insufficient to cover its expenses, including mortgage repayments. It can occur when a household spends more than 30% of its pre-tax income on mortgage repayments (which is now common place in this market).
Interest rate increases: A series of interest rate increases can lead to mortgage stress.
Cost of living increases: Increased expenses for essentials like groceries, utilities, and healthcare can make it harder to meet mortgage repayments.
Job loss: A job loss can make it difficult to meet mortgage repayments.
Change in living arrangements: A change in living arrangements can make it difficult to meet mortgage repayments.
Additional Debt: Additional debt, such as car loans, personal loans, credit cards and payday loans have a massive impact on the ability to pay a mortgage.
Mortgage stress can have physical, psychological, and social consequences.
It can lead to borrowers being unable to meet their monthly mortgage repayments or cover other household needs.
If action is not taken it can lead to credit markets on your credit file due to missed payments. This can lead to limited ability to refinance out of your issues.
Having a chat with a mortgage broker can be your first step to easing your mortgage stress and potentially get you out of a financial disaster.
The first step is for your mortgage broker to speak with your bank about a rate reduction. This is a simple first step that could result in immediate easing of mortgage stress while a more long term solution is investigated.
There are several key factors to consider when refinancing a home loan
Compare interest rates offered by different lenders to find a better deal than your current loan. Lower interest rates can help reduce your monthly repayments and save money over the life of the loan.
Take into account any upfront fees, ongoing fees, or exit fees associated with refinancing. Ensure that the potential savings from refinancing outweigh the costs involved.
Evaluate the features offered by different lenders, such as offset accounts, redraw facilities, and additional repayment options. Choose a loan that aligns with your financial goals and requirements.
If you’ve built up equity in your property, you may be able to access it through refinancing. This can be useful for renovations, investments, or other purposes. However, keep in mind that borrowing more may increase your overall debt.
Lenders assess your creditworthiness when considering a refinancing application. Maintaining a good credit score and demonstrating a reliable repayment history can improve your chances of approval.
Research different lenders and consider their reputation, customer service, and flexibility. You may want to consult with mortgage brokers who can help you compare options from multiple lenders.
Before proceeding with refinancing, it’s important to carefully evaluate your individual circumstances and financial goals. It’s recommended to seek advice from a financial professional or mortgage broker who can provide personalized guidance based on your situation.
Disclaimer
Please note that the information provided here is general in nature, and it’s always advisable to consult with a mortgage professional for specific details and guidance regarding refinancing a home loan in Australia.
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Blacktown has recently been revealed as having the highest percentage of the population under mortgage stress in Sydney. We provide details regarding mortgage stress and how a mortgage broker can investigate options to ease the repayment pressures of your existing home loan through methods such as refinancing your loan or debt consolidation.
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