What is mortgage stress? Understanding, identifying, and overcoming it
Everyone wants to protect their home, so what is mortgage stress in your home loan and how do you overcome it? Mortgage stress occurs when a household spends a significant portion of its income, often defined as over 30% of pre-tax earnings, on mortgage repayments, leaving little room for other essential expenses. This financial strain is exacerbated by rising living costs, interest rate hikes, or unexpected life events such as job loss or medical emergencies.
Mortgage Stress FAQs
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Mortgage stress generally refers to when more than 30% of your household income is spent on home loan repayments. At this level, it may become harder to cover other essential living expenses.
You’re likely in mortgage stress if:
- You’re worried about making your next mortgage repayment
- You’ve started missing or delaying payments
- You feel financially stretched even after cutting back on other expenses
- Your expenses are higher than your income
- These are common signs that you may be entering or already in financial hardship.
If your repayments fall into the “stress” or “danger” zone, it may be time to review your budget, negotiate with your lender, or seek professional support. MyBudget can help you build a personalised plan to reduce stress and take control of your finances. Call 1300 300 922 or get in touch online.
The calculator estimates your household’s monthly income (based on the pre-tax annual income you enter), compares it to your monthly mortgage repayments, and shows the percentage on a stress bar. Results above 30% are typically considered “mortgage stress”.
No. The tool focuses on the ratio of your mortgage repayments to your household income. It does not consider other expenses such as food, bills, or lifestyle costs, which may also affect your financial comfort.
The calculator is designed to provide an indication only. It assumes stable income, does not adjust for tax, living costs, or future interest rate changes, and results may vary from how banks or lenders define mortgage stress.