How would a day be like without any stress? It will be quite boring that we have nothing important to think over. You must have not heard the term ‘Mortgage Stress’ but most of the people who have a home loan on their head go through it.
What is mortgage stress?
When your income is not sufficient to meet all your household expenses including home loan repayment, the person is considered to be in mortgage stress. According to the record made by some experts, people experiencing this stress spend more than 30% of their pre-tax income on home loans and this itself is the cause of it.
Overcome your mortgage stress
Sometimes there is nothing wrong with extra. Being a home loan buyer, you should always plan your repayment on a high percentage of interest than the rate you have got so that if there are any interest hikes in the future, you will probably be prepared.
The borrowers who do not plan well before purchasing a home loan, most of the time fall behind when it comes to mortgage repayments. Also, these people become financially unstable when changes occur in daily expenses like illness, a divorce, loss of a job, or maybe the birth of a child and are unable to pay the loan.
So just in case, it seems impossible for you to meet the home loan repayments without extending your finances, don’t worry. It is possible to overcome this stress and get yourself stable again with some bright and smart planning.
Now if you are thinking of the ways to overcome mortgage stress, here are some good tips for you to follow.
Recreate your budget
Even you know that your financial position has changed from the time you signed on the dotted line printed on your home loan agreement. Therefore, it is a better idea to recreate your household budget before you go in any stress by taking fresh digits on all your outgoings and incomings. Doing this will give you a clear idea of the expenses that are necessary and the ones to be cut down. By this, you can save a lot of funds in your wallet to repay the mortgage.
If you do not know how to manage your budget, you can always use a budget calculator to plan out everything in your budget and get control over it.
The negotiation Part
Instead of borrowing funds from your relatives and friends for every month’s repayment, you can always try and negotiate with your lender for a lower interest rate. If you have a good repayment history, the lender might listen to you and can get ready for negotiation. Like this, the stress to repay your friends will also be deducted and you will get good discounts from the lender.
However, if you are facing major issues, it is best to talk to your lender about it and ask for hardship assistance. It is possible that your lender might rearrange your financial terms of mortgage repayment and give you a little vacation from it where you will either just have to pay the interest or just the core value, the rest can be given later.
Refinancing to a lower rate
A new way to reduce your monthly home loan repayment stress is to get the refinancing done of your mortgage at a lower rate. If you are lucky, you might find a good home loan deals with the lowest interest rate that is (variable)3.56% pa currently.
Even a reduction of 1% can make a lot of difference to the funds in your wallet.
So these are some points you can use to overcome your mortgage stress. Hope this is useful to you!
You must have heard that until and unless you are in some problem, it is better to take precautions to avoid it.
Avoid your mortgage stress
One of the best ways to deal with mortgage stress is to avoid it but how is the question.
Here are a few tips that can help you avoid this stress.
Buy an affordable home
People often do a mistake of borrowing more than their capacity to repay. This should be avoided and the loan should be taken accordingly. Also, you can consult a good advisor before taking a home loan.
Especially when we talk about small business and self-employed people, every adult is recommended an income protection plan. This plan replaces your income in the time of sickness or any kind of injury which helps you meet your expenses completely during the period.
So these are some points you should follow to avoid mortgage stress. Also, you can take advice from a good consultant before taking any type of home loan. For a suggestion, you can choose PierPoint Mortgage. We provide all types of home loans with the advisory service.