Mortgage stress describes a situation where a significant proportion of a household’s income is spent on mortgage repayments, causing financial difficulties and strain.

While there’s no universal definition, mortgage stress typically occurs when a household spends 30% or more of pre-tax income on mortgage repayments.

It’s natural to imagine worst-case scenarios when faced with financial difficulties, rather than dealing with the reality of the situation.

Instead of letting anxieties fester, you’ll benefit more by taking a proactive approach to managing your mortgage situation. You could draw up a detailed budget, identifying where spending can be reduced. Perhaps start investigating refinancing options, or seeking additional income sources.

By assessing the facts, such as current income, expenses, and mortgage terms, you’ll gain a more accurate understanding of your financial standing.

One major factor that people miss, is to seek verification of the bank’s figures.

Do banks ever make mistakes in their bookkeeping?

Well, Australia and New Zealand Banking Group (ANZ) do… Recently ANZ bank was slapped on the wrist, and the Court ordered ANZ to advertise the fact.

So, just because your bank statement shows an outstanding amount, it doesn’t proof the figures are correct. Ask the bank for fully audited accounts, certified and signed off by an officer of the bank.

Because if you’re facing a threatened mortgage foreclosure, it’s important to request proof from the lender. This should include documentation of the loan, the default, and fully audited accounts….

Why Worry About Mortgage Stress?

Have you noticed that worrying about it isn’t particularly helpful?

Rather than worry about mortgage stress, use it as a catalyst for positive action. An opportunity to take steps in managing your finances more effectively. Factors that can contribute to mortgage stress include:

  • High levels of debt: When a large portion of income is spent on mortgage repayments, it’s hard to meet other financial obligations and expenses.
  • Interest rate fluctuations: When interest rates rise, mortgage repayments can increase, putting pressure on household budgets.
  • Reduced income: Job loss, reduced working hours, or other income fluctuations also make it hard to keep up with mortgage repayments.
  • Unforeseen expenses: Things like medical bills, car repairs, or family emergencies can exacerbate mortgage stress.
  • Economic conditions: Economic downturns or recessions can lead to job losses, pay cuts, and reduced household income, increasing the risk of mortgage stress.

How Mortgage Stress Can Help You

By acknowledging mortgage stress, you can turn a challenging situation into an opportunity for growth. Here’s some strategies you can begin right now:

  • Budgeting and financial planning: Start budgeting, create a plan for your finances. Record all your expenses and identify areas where you can save money, and reduce financial stress.
  • Build an emergency fund: Mortgage stress can arise from unexpected events like job loss or emergencies. Start an emergency fund to help cushion the impact of such unforeseen circumstances.
  • Look where you’re spending: You may decide to downsize… For example, moving to a smaller or cheaper home, reducing unnecessary expenses, or seeking additional sources of income.
  • Get help: If you’re worried about mortgage stress, seek professional advice from financial advisors or mortgage brokers. They can help you explore options like refinancing, loan restructuring, or government assistance programs to alleviate financial pressure.
  • Learn about “Money”: Understand where “modern money” comes from. Educate yourself about personal finance, mortgages, and budgeting. Increased financial literacy empowers people to make informed decisions and improve financial well-being.

When experiencing mortgage stress, households often prioritize mortgage repayments over other expenses, potentially affecting their quality of life and financial well-being.

Not everything is as it appears.

Where’s The Proof?

Just ask the sub-postmasters in the UK Post Office Scandal. Lives destroyed through false accounting and cover-ups by the Post Office… Who says the same thing isn’t happening within the banking system?

It’s your right to have your bank review their figures and investigate any potential mistakes:

  • Review your mortgage statements: Look for any inconsistencies in payment amounts, interest rates, or fees.
  • Verify account numbers: Confirm that the account number on your mortgage statement matches your account information.
  • Look out for unusual activity: Review your statement for any unauthorized transactions or unfamiliar charges.
  • Reach out to your bank: If you spot any errors, contact your bank as soon as possible. They can investigate and make corrections as needed.
  • Request audited accounts: Financial institutions are required to maintain accurate records. You have the right to ensure that their calculations are correct. Ask the bank staff to verify their figures and provide you with audited accounts.

Banks have internal audit departments responsible for ensuring the accuracy and compliance of their financial records.

Aren’t banks expected to act ethically and in good faith when dealing with customers? These include providing clear communication, reasonable notice, and opportunities for customers to address any concerns or disputes.

Banks are required to follow specific guidelines and procedures when it comes to dealing with loan repayments. Threatening demands without providing necessary information or proof could be considered unethical and potentially unlawful.

It’s not acceptable for a bank to ignore your requests for information, proof, or verification of debt, especially if you’re facing demands for repayment.

Don’t worry.

Be Happy.

Do as the banks do.

Admit nothing. Deny Everything. Ask for proof.