Is your home loan becoming unaffordable?

The back of a person who is looking out of the window in their kitchen.

If your household is struggling to afford rising mortgage repayments, you are not alone. There’s no better time to reach out to Anglicare’s financial counselling service for free and practical support.

The Reserve Bank has introduced nine back-to-back rate rises since last year as part of its strategy to curb inflation, and many households are struggling to afford their higher repayments.  Some commentators predict there could be several more rate rises on the way. This is causing particular concern to people whose low, fixed rates are due to expire in the coming months.

Anglicare Program Manager Resilience and Wellbeing Mat O’Brien says it’s important that people prepare for the change.

“Interest rate rises are outside your control, and they are causing difficulties for many people. You are not alone, so don’t be too hard on yourself. A new situation requires a new approach and the smart thing to do is to reach out for support,” he said.

Your priority needs to be keeping a safe and secure roof over the heads of everyone in your household. You may need to reduce other debt so that you can free up funds to maintain your mortgage, and you will probably need to change your lifestyle as well.

Mat says it’s essential that you don’t move to credit or ‘buy now pay later’ products in a bid to maintain your current situation:  “You will only accrue new debt that will make your situation even more challenging,” he warns.

Practical steps

Mat said an Anglicare financial counsellor can support you to speak with your lender and set up a new budget.

“Banks and other financial institutions are competing for your business, and you may be able to find a better deal elsewhere – or your existing bank may match a competitor’s offer,” he said.

“Your financial counsellor can help you to set up a budget that is straightforward and achievable. We recommend that you start living within it straight away, even if your rate rise is still a little way off. We suggest it factors in about half of what the increase will be in about three months’ time. This helps make the adjustment more gradual, and leaves room for you to review it again when your repayments actually change.

“We suggest you think about whether there are ways to boost your income. Could your older children get some work so that they can save for the things they want? Learning to save now will serve them well throughout their lives.”

Bring your family on board

“Your whole household needs to work together as a team in this new situation,” Mat says.

“Be open with your family members about your financial challenges, without causing them anxiety. Encourage children to think about how they can help the family unit to achieve some savings.

“Add up the amount of money you spend on takeaway food, for example. Often it’s bought on impulse, which makes it difficult to track. This makes it a risk to your household budget. Instead, draw up a weekly meal and shopping plan and again, involve all the members of your household in shopping and cooking activities.”

Contact a financial counsellor

Ring the National Debt Helpline on 1800 007 007 and you will be connected with an Anglicare financial counsellor in Tasmania.

They can talk to you over the phone and also arrange in-person visits at your nearest Anglicare office. We have offices in Hobart, Glenorchy, Sorell, Launceston, Burnie and Devonport.

Visit this webpage to read stories about how financial counselling helps Tasmanians in a range of financial situations.

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