The pitfalls of interest-only mortgages and how to avoid home loan stress

With the official interest rate threatening to eventually rise and some experts tipping a “market correction” in house prices, this is a good time to talk about mortgage stress. What are the signs and how do you avoid it?

ABC News has reported that more than one-third of Australian home loans are the ‘interest only’ variety, which means that the loan repayments are covering only interest charges and fees, and doing nothing to reduce the principal loan amount. Added to that, other research shows that eight percent of mortgage holders have little equity in their homes, making them vulnerable should house prices fall or they’re forced to sell. There’s also data to suggest that around one-in-ten interest-only borrowers are not even aware that their loan repayments do nothing to increase their equity in their home.

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Don’t let your mortgage put you at financial risk. Here are my tips for avoiding home loan stress:

If your mortgage is giving you stress, call MyBudget on 08 8215 7683. We’ll analyse your finances and put together a free “no more money worries” budget for you. We also have a team of caring loan officers who can look at your current mortgage and make recommendations based on your budget plan.

We analyse your situation and design a plan that achieves your goals.

Until you’ve examined your finances in detail, it’s difficult to determine your exact financial position. At MyBudget, the budget plans we prepare are true long-range money management plans. The plan projects your finances over a 12-month period. So you have a clearer picture of what your future looks like, not just how your budget is week-to-week.

What will you do with your savings? Reduce your mortgage? Invest in shares? Take a holiday? Or simply enjoy the feeling of satisfaction that comes with having savings to fall back on.

Personal budgeting is the only way to truly gain control of your money and your financial future.

The benefits of personal budgeting:

  • Personal budgeting is the only way to gain a thorough understanding of your financial situation.
  • Personal budgeting ensures that you always live within your means, and provides a safety net for inevitable changes in life or when things go wrong.
  • Personal budgeting is the key to accumulating savings and achieving your financial goals.
  • Personal budgeting is one of the most effective methods for paying down debts and avoiding ongoing debt in the future.

Thousands of people come to MyBudget every year seeking our support and advice about managing their money. We can provide structure, support and guidance to help you get on track.

Get expert help from people who care.

MyBudget’s strives to find a solution for every individual. Unlike an App or spreadsheet program, our experts create a plan that’s specially designed to address your needs and priorities.

We also understand that the hardest part about budgeting is sticking to it. That’s why we do the legwork for you. We can manage your budget, pay your bills, save for you, and communicate with your creditors, if necessary.

Succeeding is easier when you have a team of experts supporting you along the way!