The great Australian obsession with owning your home has engulfed many families to the point of irreparable credit damage. This article defines mortgage stress, how to deal with it and how to avoid it.
Once upon a time, banks would lend would-be home owners a sum of money based on repayments being less than 30% of the borrower’s gross income. As interest rates fell in the early 90s and competition from non-bank lenders flourished, home loan providers relaxed this rule and increased the flexibility of loans generally. Many Australians are now paying dearly for ignoring a rule which was initially put in place to protect us.
How to identify mortgage stress
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In the most basic terms, mortgage stress means that a person is struggling to meet their loan repayments.