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 is when your home loan repayments take up 30% or more of your household income. This mortgage stress percentage is commonly used by lenders and in mortgage stress tests to assess financial risk.
You may be in mortgage stress if your repayments feel difficult to manage, you’re cutting back on essentials, or your mortgage is taking up a large portion of your income. Using a mortgage stress calculator is the quickest way to check your risk.
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.
A mortgage stress calculator compares your household income to your mortgage repayments and shows your mortgage stress percentage. Results above 30% are generally 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.