A Banker Shares his Top 3 Tips for Avoiding Mortgage Stress

To find out how to avoid over-committing to a huge mortgage, we’ve sourced tips from someone who’s served time on the other side of the fence – in some of Australia’s biggest banks.

Mortgage stress has been in the news a lot lately. With Australian home prices surging more than 140% in the past 15 years, owning a home is no easy feat. Young people are stretching their finances to buy into The Great Australian Dream and more of us than ever before are retiring with an unpaid mortgage. According to Martin North, principal of research firm Digital Finance Analytics, one in four mortgaged households are already in stress — meaning they do not have enough income to cover mortgage repayments and other living expenses.

What you should be aware of

Over the past 12 months, there has been an increase in mortgage stress for people considered to be ‘at risk’ (which is based on the amount originally borrowed) and those considered ‘extremely at risk’ (based on the amount currently outstanding), new research from Roy Morgan shows. In the three months to July 2016, 17% of mortgage holders were deemed ‘at risk’ (based on the amount originally borrowed). This increased to 17.3% in July 2017. Over the same period the proportion of mortgage holders deemed ‘extremely at risk’ (based on the amount currently outstanding) also increased from 12.4% to 12.8%.

Am I at risk?

One symptom of mortgage stress is being unable to make one or more repayments on your home loan – known as being in arrears. UNO home loan adviser Carlo Monzo recently helped a couple through the UNO platform who had found themselves in arrears. One applicant had recently lost their job, and they had some unsecured debts in the form of personal loans. “They couldn’t catch up and their lender had given them a final notice that they were going to repossess the home,” says Monzo. Monzo spoke to one of UNO’s lenders, Pepper, who was able to refinance the couple’s mortgage and consolidate two out of their four debts. “The unsecure debt they still have is very minimal – they can comfortably afford it,” says Monzo. “Plus the surplus that they have will continue to pay off these debts a lot quicker.” Best of all? “They got to keep their home.”

What if I’m in mortgage stress and can’t make my repayments?

If you’re worried about mortgage stress, an insider tip from UNO’s head of home loans, Jason Azzopardi, is to contact your lender and ask for a repayment holiday. Azzopardi, who has extensive experience working for Australian retail banks, advises that a repayment holiday allows consumers to take a break from repayments. A repayment holiday could be used if you’ve lost your job, find yourself in financial strife for another reason, go on maternity leave or would like to go on an extended holiday. Depending on the lender, you may be able to take a repayment holiday for up to six or even 12 months. Taking a repayment holiday allows you to consider options like refinancing to lower your monthly payments to assist you to get back on track. If you’re already in arrears (i.e. you’ve missed a home loan payment), Azzopardi says it is difficult to find a lender who will refinance, therefore the repayment holiday is an important option should you find yourself in stress. Speak to a UNO adviser to learn more.

I’m just scraping by. Should I be worried about mortgage stress?

If you’re worried about mortgage stress, you might like to consider refinancing to get a lower rate, suggests Azzopardi. If you’re on a less than a 30-year loan term, you might look at extending the term to 30 years (some lenders even offer 40 year loan terms). It’s always a good idea to consolidate debts like personal loans and credit cards wherever you can, particularly if you have equity. Another option could be to switch to an interest only home loan, which will reduce your monthly payment in the short term, but isn’t a good long term solution, Azzopardi says. Speak to a UNO adviser to find out your options.

How UNO can help

UNO’s specialist technology, coupled with the expertise of our advisers, can help you find the best home loan for your circumstances – one that isn’t going to stretch your finances. Even if you don’t already own a home and are thinking about buying in the future, it’s a good idea to be aware of mortgage stress and know how it is affecting more and more home owners. When saving for a deposit, many people forget about factoring in the cost of stamp duty – the tax on written documents and certain transactions imposed by state and territory governments. UNO’s stamp duty calculator lets you work out how much you’ll need on top of your deposit, depending on where you live and your circumstances. If you’re worried about mortgage stress or have any concerns about your current home loan, Book in a quick call with our customer care team about your options. This information is general in nature and you should always seek professional advice when making financial decisions. Book a call in with UNO

Book Call Now

UNO home loans

Need help with your home loan?

UNO Brokers are available night and day for a quick review or your situation and bring expertise that will support better decision making that will save you time and money. Book in a quick call when it suits your busy schedule

Get Started

Related Articles

TESTIMONIALS

What our customers are saying

Sam Rezai
October 2, 2024
I have gone through 6 different mortgage brokers prior to meeting Andrew Wyers. He is the most patient mortgage broker I’ve encountered and also the most knowledgable about the bank’s lending process and products available. It took me 1 year to find a house I was happy with and Andrew was always there to assist with any issues or questions I had; he always return my phone call, even on the weekends or when his away on holidays. The loan process was smooth and I had no complications. The process with Andrew was again nice and easy, he took the time to find and put together the right package that was suited to my situation. I have recommended Andrew to my family & friends and everyone have been grateful and completely satisfied with his service.
Read more
S Wilko
September 23, 2024
I had not dealt with Scott or UNO before finding them on the internet. Even as an Australian citizen living and working overseas, I knew obtaining a loan would be difficult. However, Scott went above and beyond what I expected from a mortgage broker. I genuinely don’t think you could find another company that works as hard as they did to get my home loan approved. I cannot recommend them highly enough. Everyone I dealt with at UNO were extremely professional and helpful. If you are looking for a broker, you would be mad not to give them a go. Thanks to Scott Wilkinson, Dalby Bajwa, Jena Lasquite and Andrew Pacini. Shaun.
Read more
Shan Liao
September 3, 2024
I had an outstanding experience with Tian Liu. He was incredibly professional and attentive, going above and beyond to meet my needs. His expertise and dedication made the entire process smooth and stress-free. Tian's deep knowledge of the market and commitment to finding the best solutions for his clients truly sets him apart. He was always available to answer my questions and provided invaluable guidance throughout. I highly recommend Tian Liu to anyone in need of a reliable and skilled broker!"
Read more
Nathanael Chin
September 3, 2024
Tian Liu provided exceptional service throughout the entire process. His professionalism and keen attention to detail were evident from the start. Tian consistently kept us informed and offered insightful advice that made us feel confident in our decisions. He truly cares about his clients and works tirelessly to ensure the best possible outcome. We couldn't be happier with his assistance and highly recommend Tian to anyone looking for a trustworthy and knowledgeable broker.
Read more
Patrick Winters
August 14, 2024
For the past three years, it has been an absolute pleasure to work with Mike Parsons. He has consistently helped us navigate commercial property loans with skill and efficiency. Mike’s timely and professional responses to our inquiries have been invaluable. We have built a strong, reliable relationship with him and eagerly anticipate continuing our collaboration in the future. We highly recommend his services.
Read more
Lee Robibaro
August 6, 2024
I am so thankful and grateful to have Scott Wilkinson as my broker. He not only looked after me every step from start to finish he gave me confidence and I was able to trust him and his expertise. My children and I are now happy in our new home and very appreciative of Scott's help. I will definitely be only having Scott as my broker from here onward as there is no mucking around and straightforward answers. Thanks again
Read more
Steve Mav
August 6, 2024
Scott and the whole team at uno have been amazing. Super responsive and helped us achieve a result that we couldn’t have possibly achieved on our own.
Read more
Thien Pham
August 5, 2024
Scott, Dalby and Jena were awesome to work with for my recent Home Loan, they are responsive and knowledgeable - which helped ensure a smooth purchase from pre-approvals to settlement. This is the second property I've purchased with UNO as my mortgage broker and would definitely recommend their services. Thanks again to the UNO Team for the awesome support.
Read more
Scott Hutchinson
August 5, 2024
I am writing this summary in support of recommending Mike Parsons as a Mortgage Broker. At the time of writing this, I have known Mike for 4 years and he has executed 4 mortgages deals for me (including 2 refinances) over that time. Mike has provided me incredible service as a mortgage broker as follows : - Works painstakingly on getting the scenarios together to provide you options that optimize your position. - Works inordinate hours on the detail necessary to support the scenarios. - Mike keeps you updated on the status and progress of the applications and also helps you work through answering questions and any complexities that may arise. -In my cases, given the complexities and timings of my situations , these application processes would take many weeks to finalize . Mike never gave anything other than utter commitment and focus to getting the job done. Mike acts as a true business partner throughout this whole broker /mortgage journey. I simply would only go to Mike for any future dealings on getting a loan from a bank (and as will my kids in the future !) . There is no way a bank (I have seen anyway) would provide this kind of time nor service to a customer. You can rest assured that once Mike has done the deal, you have ended up with the most optimized position taking into account all the variables/scenarios in play. Scott Hutchinson
Read more
Jason Seam
August 5, 2024
I've worked with Scott Wilkinson for my last 2 properties and he's been excellent. He sourced multiple options and didn't push a specific bank, tailoring his recommendations to me based on my requirements. I was specifically requesting a "medico loan" and Scott could navigate that extra requirement with expertise. When I was initially working with Scott, I was also trialling 2 other brokers and neither of those 2 had the same breadth of lenders, or could provide the same deals. I've referred multiple buyers to Scott and his team; one of them said to me after working with him, "how'd you find this guy, he's so good compared to all the other broker's I've worked with!" I'm going into my next purchase with Scott as my broker partner again. I recommend him to everyone
Read more
Tina Anderson
July 29, 2024
My experience with Mortgage Broker - Scott Wilkinson, and his team - exceeded my expectations! I couldn’t be happier after settlement - in this current financial climate. He listened to what my requirements were in a loan and then devised a suitable plan for me moving forward. Which was something I didn’t think was possible to achieve. I strongly believe that Scott’s qualifications and previous experience in the Finance Sector - sets him apart from other Mortgage Brokers as he has more insight into the industry and the needs of the customer. Scott was professional, provided solid options, was timely with communication and gave great advice. I will definitely be using Scott’s services in the future and I highly recommend him to anyone as a Mortgage Broker.
Read more
Marlon Baena
July 22, 2024
Karis dedication to assisting with our home loan, even while I was on holidays, truly exemplifies a commitment to excellent service. It's the small things that often make a big difference, and it seems Karis attention to detail and clear communication were key to our smooth home purchase. I highly recommend using UNO and Karis for your home loan needs.
Read more