Almost a million people in Australia are facing mortgage stress. What used to be a great idea at the time, becomes a nightmare after a couple of years. Borrowing money from a bank and putting the property under mortgage seams completely fine when you need the money, but returning the debt is not always easy as it seems.
But, how people get into debt? How the mortgage stress becomes real?
Well, the research shows that the main reason for this is because the people are unable to return the money they borrowed. This sounds only logical, right? Of course, but then another question pops up, why can't they get to pay their debt in time?
The main reason for this is the cost of living that changed over the years. The salaries are not raising, and the prices are getting higher, so people have more costs and the same amount of money. For example, the difference between the property debts and the income doubled for more than 100% in the last 20 years.
That means that people who took a loan 20 years ago and were able to cover their bills each month, now are staying short. They have the same amount of money, same bills, but simply can't make it because the value of the money is not the same. Being unable to pay, people are forced to google those terrible words - owner sell house.
Struggling with their debt and being aware that they are unable to cover their bills, they fear for their future which means stress. In order to find a fast solution to their problem, they jump from one debt into another. They close their credit cards by simply getting bigger loans and opening new credit cards. This seems like a simple solution in the moment, but in the long run, it always ends with the same google search - owner sell house.
Experts suggest that the worst possible scenario is putting more on credit cards and ignore the fact that you owe more than you earn. The best options in situations like these are creating a better lifestyle plan and spending less money on things you don't really need; getting another job and make more income; and finally, prioritize the debts - try to reduce the overall debt you have.
Of course, it's best to make a good plan before you enter the game of loans and mortgages. If you're about to take a loan from a bank and place a mortgage on your house, make a good calculation of your needs and your income. Knowing that the value of the money will surely change over the years, you'll know how to best predict the future in order to reduce stress and never be in need to make that "owner sell house" search.