What some Australians have done to successfully beat mortgage stress

One of the top 10 stresses being experienced by Australians is mortgage stress. With soaring house prices, high interest rates and high cost of living, many homeowners are being overwhelmed with debt and are finding it difficult repaying their home loan. A report by Roy Morgan, says that in 2023, “over 1.5 million mortgage holders were considered ‘At Risk’. And there are over 700,000 more households ‘At Risk’ of mortgage stress in 2024 after a year of interest rate increases.”

This unwanted stress and anxiety are harmful to a person’s well-being. It can also lead to a mortgagee in possession if matters get dire, and the last thing you want is for the bank to take possession of your property. In this article, we unpack strategies people have used to fix their mortgage problems and reduce their mortgage stress.

Case study snapshots:

• Worked more
• Shared the loan repayments
• Downsized
• Moved to Asia.

These case studies will get you thinking about ways you can make it work for you. For qualified financial guidance see a financial advisor. If you are experiencing money troubles, seek free financial counselling.

Worked more to beat mortgage stress

It might sound like a dichotomy, but for some, doing extra hours to beat mortgage stress is actually a very doable option. You may have the time, energy and capacity to work overtime or get a second job. Working part-time or casual hours can pay real dividends.

One security guard working full-time at a Melbourne shopping centre was struggling to pay his mortgage and raise four kids at the same time. His eldest son was old enough to look after his siblings, so the security guard decided to work a few hours extra each week. He took a part-time job with a different security organisation patrolling business premises two evenings each week. He now takes home enough to pay his mortgage and raise his kids. At the same time, he has put a cap on the number of hours he does so as not to burn out and to maintain a level of quality time with his children. He has also explored ways with a tax agent to maximise tax benefits.

Read about more job ideas in our article “5 Ways to Beat Mortgage Stress”

Shared the loan repayments

One man, who was single and owned a house, rented out the spare bedrooms to find extra income to pay the mortgage. He asked around and found friends, along with friends of friends, who were looking for a low rental option. He chose compatible house mates and tapped into a great way to meet his home loan repayments.

Another young man in his late 30s bought a house and rented it out straight away. He then moved into a cheap, no frills, one-bedroom apartment and subsidised his loan repayments through rental income. He also spoke with the bank to find out how long he could rent his house, without it putting him in a place where he would have to pay capital gains tax if/when he was to sell it.

Downsized

Perhaps you’re not in a position to rent your property or take in paying tenants. Another option is simply to downsize. One couple didn't want to relocate to the country where property was cheaper. They wanted to stay in Melbourne. After looking around, they located an apartment in a nearby suburb and sold their house to pay for it. The couple were taking advantage of the benefits of buying and selling in the same market. They paid considerably less stamp duty for their new apartment, being a far lower purchase price, and reduced their mortgage repayments to almost nothing through the balance of the funds from their house.

Moved to Asia

This may sound a bit flippant, but it’s a reality. With western countries experiencing a massive burden from overinflated house prices, massive loans, high interest rates and cost of living, one man in his 50s decided to pack his bags. He was in a low paying job in a regular suburb experiencing mortgage stress. He decided to investigate getting a visa to live in Asia. Eventually he got a visa, sold his house and relocated to Thailand. He paid a fraction of the cost for a house in Thailand, retired early, and lives like a king on the balance from the sale of his home in Melbourne. His friend is now doing the same and following him to Thailand. This scenario is being repeated by other Australians getting visas and relocating to countries in Asia.

Free financial counselling from Better Place Australia

If you are in financial difficulty and experiencing mortgage stress, help is there for you. Better Place Australia financial counselling service is funded by the government to provide free support for people with money issues. You can access professionally qualified financial counsellors from Better Place Australia in Melbourne and across regional Victoria.

Watch the video case study snapshot. Financial Counselling Team Leader Christine shares how she supported and mediated for an older woman who could no longer make her mortgage repayments. The woman heard about the availability of free financial counselling through Better Place Australia and reached out for support.

Listen to the podcast for a more detailed account.