Despite record low interest rates, many Australians are reporting they are struggling to keep up with home loan repayments. Cutting back on other essential expenses, worrying about the next repayment and being late with utility bills are all warning signs of mortgage stress.
A recent survey by Galaxy Research for iSelect.com.au found seventy per cent of home loan borrowers have experienced mortgage stress. So what can you do?
Lower your repayments
Almost one third of borrowers who told Galaxy they had experienced mortgage stress also admitted that they took no action when the Reserve Bank lowered interest rates.
The Reserve Bank has lowered the official cash rate twice this year, in May and August. The RBA’s official cash rate is now 1.5 per cent, 0.5 per cent below the rate from 2015. Your bank or credit union probably passed on most or at least part of this 0.5 percentage point cut in rates.
However most borrowers don’t ask their lender to decrease their repayments. Many borrowers are still making higher repayments than they need to be. This is a good strategy for building up a financial buffer against problems in the future. However when you are feeling mortgage stress, it’s time to lower your repayments if you can.
Save hundreds every month
You can save plenty of dollars every month by moving to a cheaper home loan, and it may be cheaper and easier than you think. How much can you save by switching home loans? The simple answer is a lot espcially for most borrowers who are customers of the big banks. There are plenty of great lenders with rates well below the big four.
For example, a homeowner with a $300,000 mortgage who is currently paying 4.69 per cent, could save up to $175 per month by moving to a mortgage with a rate of 3.69 per cent.
There are hundreds of great home loan deals listed on Infochoice.com.au right now. Check out your mortgage options today at Infochoice.com.au.