5 Tips to Stay on Track
Are you making your mortgage repayments but finding that your bank account is getting stretched every month? Use these 5 tips to stay on track or get back on track with your mortgage repayments.
Take the “what if” test.
Look at your mortgage repayments and ask yourself “what if” about multiple scenarios that could happen to you.
What would your repayments be if interest rates go up? Would you still be able to afford them?
What if your or your partner lost your job? What if someone in your family becomes injured and they incur medical expenses?
Do you have a buffer of savings that you could draw on?
If the answer to any of these questions makes you feel uneasy, then it could be time to re-evaluate your loan terms.
Create a budget and stick to it.
Make a budget to monitor your spending and help you to keep up with your mortgage repayments. It’s important to set a realistic budget. One that is achievable and provides flexibility for when life throws curve balls at you. A great way to stick to a budget is to automate additional savings or mortgage repayments. That way you don’t notice it leaving your account and then you’re left to spend the remaining funds as per your budget.
Speak to your broker/lender
As finance brokers, it is our job to manage your loan for the entirety of its term, not just at the beginning. If you ever have questions, then you are welcome and entitled to contact your broker for help.
If you are struggling with mortgage repayments, then your lender is required to assess your situation and respond within a set period of time. It’s important to ask for help quickly before the situation gets worse.
Remember that finance brokers and lenders have worked in the industry for many years and have seen a number of cases that are similar to yours. There is no need to be embarrassed or ashamed.
Some solutions that lenders might offer:
- An extended loan period. Meaning you make smaller repayments over a longer time. Note: this may lead to you paying more interest due to the increased term.
- Postpone your repayments for an agreed period.
In some circumstances, lenders will agree to postpone payments if clients are likely to regain control of their finances within a short time frame.
- A combination of both solutions.
Don’t be afraid to ask for help
Many people have experienced financial struggles. The faster you reach out, the less serious your situation will be. If you are unsure about what to do or are having trouble getting the results you want, confidential help is available from a financial counsellor.
Things to be wary of:
- Using credit cards or getting payday loans.
Going further into debt as a means of dealing with mortgage repayments is not a viable solution and will only increase the seriousness of the problem. Seek help before this avenue is taken.
- Borrowing money from family and friends.
Whilst this method has the potential to work, it grows your debt as well as potentially creating the feeling of being a financial burden to your loved ones.
- Refinancing or consolidating debt.
Whilst this too can be a beneficial way to manage debt, it’s important to get trusted financial advice before doing so. You may end up paying more on some loans and could be better off paying them down separately.
- Switching home loans.
Keep in mind that it could take time for you to recoup the costs of switching.
Don’t struggle in silence. If you start to experience difficulty with your mortgage, approach your broker/lender as soon as possible to discuss your repayment options.