A mortgage can often be the biggest expense within a household budget, taking the largest chunk out of a household income. With the rising cost of living, from fuel costs to the price of a coffee, the stress of paying off a mortgage can become an unwanted headache.
Falling into mortgage stress can not only have financial consequences, but can contribute to poor mental health and affect your daily life. Let’s take a look at what mortgage stress is, the causes and signs, what to do if you’re experiencing it and how to avoid it.
What is mortgage stress?
Mortgage stress is when a household finds it difficult to pay their bills, and cover their mortgage repayments at the same time. This stress arises when the ratio of income to loan repayments and expenses is changed.
While there is no truly accurate way to measure mortgage stress, a generalised measurement of this financial anxiety is when a household with relatively low income spends 30% or more of its pre-tax income on home loan repayments. Whether or not someone is experiencing mortgage stress might depend on personal circumstances, household spending, and other variables related to personal finances.
And, with rising interest rates, it’s reasonable to assume that even more households are experiencing mortgage stress.
Disclaimer: This article is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered Australian legal practitioner or financial or investment advisor.
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