Budget: review and adjust down. Many people find themselves in a precarious position when their situation changes and their budgets don’t adjust down to meet those changes.
Sydney (PRWEB) August 14, 2013
1. Mortgage Stress occurs when more than a third of income is spent on housing.
2. Mortgage Stress affects 30% of all mortgage holders.
Why, when the cash rate is at record lows, mortgage stress continues to rear its ugly head?
A possible reason is that the cost of living has increased. In an election year, the cost of living and people’s living standard is a key issue. Small increases in petrol, food and groceries and electricity all put pressure on one’s ability to finance a mortgage, especially if the individual is heavily geared in consumer debt.
A problem arises when incomes don’t increase at the same rate as inflation, and the banks elect to not pass on rate cuts. A bigger problem arises when interest rates increase and with record low interest rates, it’s arguably just a matter of time before we see interest rates on the rise again.
If this happens and unemployment increases, the “perfect storm” scenario will play out like a freight train hurtling towards immanent disaster.
Grant O’Donnell is CEO and Founder of Debt Fix Pty Ltd, one of Australia’s leading Debt Solutions companies. Mr. O’Donnell says; “…It’s certainly a concern to see people in such volume contact us for help when interest rates are so low, it’s scary…”
What can people do if they are struggling to maintain their mortgage? Mr O’Donnell has outlined a 4-part plan to deal with mortgage stress, including:
1. Budget: review and adjust down. Many people find themselves in a precarious position when their situation changes and their budgets don’t adjust down to meet those changes.
2. Speak to the Creditors: Credit providers have Financial Hardship Teams within their organisations specialised to assist those struggling to meet their obligations.
3. Consider the tough choices: It’s better to sell the house as opposed to the bank repossessing it.
4. Seek Professional Advice: Friends and family can be incredibly supportive but unless they are qualified finance professionals, you run the risk of acting on unqualified opinion (as well-meaning as that opinion may be) if you take their advice.
Grant O’Donnell says, “…If you are struggling and you can’t make ends meet, your first step should be to speak with your creditors and allow them the opportunity to assist…”
The pressures of mortgage stress can be difficult to bear. When it comes to a house, more than any other asset, there is often an emotional attachment. It can be said that a property (in this way) is more than just bricks and mortar – it represents hard work and commitment and contains memories.
Consequently, a conflict arises when the pragmatic, practical course of action clashes with the emotional attachment the property has and all too often the emotional side wins out to the detriment of the household finances.
This is when an expert opinion can help. A financial professional can step in to help you get out of debt, assess the situation and provide a qualified solution not clouded by emotion.
For more information, contact Debt Fix 1300 332 834.