And escape ‘mortgage stress’
by Neil Jenman
The word ‘mortgage’ is French in origin. It means “an agreement until death”.
In January 2020, the number of Australians suffering mortgage stress was around 1.1 million – and that was considered bad.
Since COVID-19 mortgage stress numbers have exploded. There are now 1.4 million people suffering. With the looming end of JobKeeper and the banks’ ‘holiday’ on repayments, things look scary for many home-owners.
Mortgage stress applies if borrowers spend more than 30% of their net income on repayments.
For many families who want nothing more than the dream of a family home, things are looking like a nightmare in the middle of 2020. They are in grave danger of losing their homes as they crack under mortgage stress.
But there are ways that some borrowers may save their home.
Here are eight suggestions, some of which we mentioned when the GFC hit. We were inundated with positive replies, so maybe a few homes were saved. Let’s hope it happens again.
And while we at Jenman Support earn our living when homes are sold, we don’t like to earn a living from people losing their homes. To hear some real estate network chiefs gleefully predicting a boom in foreclosures makes us sick. Only grubs and ghouls enjoy profiting from the misery of those losing their homes.
A short WARNING: Not all our suggestions are easy. But they are easier than the alternative, which is losing your family home.
ASK YOUR BOSS FOR A PAY RISE
Despite interest rates dropping, average mortgage payments have still increased thirty per cent more than average wages over recent years.
What’s the biggest problem facing many bosses these days? They can’t find good staff.
If you are a good employee, ask for a pay increase to match the amount of any increase in your repayments since your last pay rise.
Don’t know how to ask?
Then leave this article on your boss’s desk.
Or, next time you go to lunch, leave your computer screen open on www.seek.com.au
RENT THAT EMPTY BEDROOM
There are eight million empty bedrooms in the homes of Australians. Almost 80% of households have at least one empty room.
And get this: A “room” in a city home is worth at least a thousand dollars a month.
Let those numbers sink in for a moment.
Oh what, you don’t like the idea of strangers sharing your home? Well, how about the idea of strangers buying your home when the bank kicks you out?
That spare bedroom you never enter, where the door is always shut, is worth about $250 a week to you. That’s $13,000 a year. Or $130,000 over ten years. That would put a hole in the average mortgage.
Plenty of good people need to find somewhere to rent. Many are hard workers who want little more than a clean bed. The good news is this: You get to choose the person you want.
Worth checking out?
They’ll hand you at least a thousand dollars a month.
Think it over.
Then try it. Place the advertisement and watch how many nice people turn up.
You’ll be surprised how easy it is.
And, if you’ve got two spare bedrooms, well, that’s $26,000 a year. More than a quarter of a million dollars in a decade. You could buy a lovely investment property in a regional centre. Who knows where this idea could lead?
RENT YOUR HOME
If you want to cut your payments in half, move out and rent your home to someone else.
Where will you go?
Home to Mum and Dad. Stay with friends. Rent in a cheaper area. Rent a smaller place.
Any of these suggestions, if you can manage them, is surely better than losing your home.
And, besides, it may only be for a few months and could mean a few extra years of living in the home you love.
Okay, granted, this method won’t keep your current home. But it may eliminate mortgage stress and make sure you’ve still got a home.
The high cost and the stress of snobbery isn’t worth it. Sell your home and move to the other side of the highway (you know what I mean).
Get rid of the McMansion in Ritzville and buy yourself a less expensive home in a less prestigious suburb. There are still plenty of suburbs where you can buy a great home in a quiet street in a wonderful community for $700,000. Probably even less.
What would you prefer? That people think you’re rich, but really, you are stressed-out and battling to survive? Or, that people think you are battling, but you have low debt and you are ever-so-happy?
The price of pretending to be prosperous is very high – both financially and emotionally.
DRIVE A HOLDEN
Well, not literally. And, besides, Holdens will be gone soon.
So maybe a Ford. Or a small Toyota. The new Corolla is gorgeous. Or check out Kia.
The point is this: Do you really need that flash car with the big repayment?
We’re talking about saving your home here. And if that means back-trading your car for a cheaper model, don’t think about it, do it.
What do you value more? Your family home, or the flash car you leave in your driveway to make sure the neighbours see it?
And, do you really need two (or three) cars? Come on, seriously. Is there no public transport in your area? Would it hurt to walk to the bus stop or train station?
My step-grandmother died debt-free at one hundred years of age, shortly after she got the telegram from the Queen. She blamed it on exercise (her longevity not the telegram).
STOP WASTING MONEY
If you don’t think you’re wasting money, take a closer look at your expenses. It’s amazing how people justify wastage of money.
For example, you might spend a mere ten or twenty dollars a day on coffees and lunches. That’s up to $5,000 a year. You could eliminate most of that by bringing your lunch to work.
Sure, brown paper bags are not the current fashion trend. But you know what’s fashionable these days: Debt. Not for you, surely?
Pack your lunch and save your home. What a good deal.
GET A SECOND JOB
Already got a second job? Well, get a third one.
Do anything (legal) that will bring in some extra dollars to help with your mortgage. Mow some lawns in the area. Start a rubbish removal service. Clean windows. Drive a hire car or a ‘Lift’ (it’s better than a cab). Become a waiter. Deliver junk mail (and get fit at the same time).
Hard work never killed anyone, did it?
Okay, if you’re really against the idea of getting a second or third job, try finding a job that pays better than your current one. Or, go back to the first suggestion: Ask for a pay-rise.
Maybe you could sell real estate. It’s a great job, especially if you are willing to work hard and you are devoted to helping people. Plus, you will have some of the laziest competitors in any industry, many of whom don’t look after their clients.
There is a huge demand for good real estate service. Seriously.
If you need any help keeping your home, please contact us and we will do all we can to help you at no charge whatsoever. Who knows what might come up over a chat? Maybe we can refer you to a financial counsellor for advice. We will fight to help you keep your home.
If you are unable to keep your home, we will help you to sell for the best price without up-front or needless costs.
Our hearts go out to all families who are suffering mortgage stress. We hope some of our suggestions will help you. Selling your home because of mortgage stress should be a last resort.
The word ‘home’ is the second most emotive word in the English language (after ‘mother’).
A home is worth fighting to keep. Good luck to you.
PLEASE NOTE: Our focus is upon helping consumers. Abuse from agents on our web site or Facebook page will be deleted, ignored or well publicised – it depends on our mood.
But one thing will never vary: We will never stop doing what we love most – helping polite and honest consumers get the best deal possible in real estate. And, of course, if any agents are serious about taking care of consumers, we’ll help you too. Thank you.