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Two million Australians struggling to keep a roof over their head - Finder
MILLIONS of Australians are struggling to pay their mortgage and rent, new research by Finder, Australia’s most visited comparison site reveals.
A recent Finder survey of 1,023 respondents found that 15 percent – equivalent to 2.9 million Australians – are asking for a rent reduction or pause in their mortgage repayments.
This includes 1.2 million homeowners who have already contacted or plan on contacting their lender regarding a pause in their mortgage repayments.
A further 1.7 million Aussies intend on negotiating cheaper rent with their landlord.
Kate Browne, personal finance expert at Finder, is concerned by the number of Australians only just scraping by.
“Almost everyone has felt the financial fallout in some way but there are options to help you get back on your feet," Ms Browne said.
“Whether you own your own home or are renting, it’s time to re-evaluate your expenses and see where you can cut down.
“If you have a home loan, a pause in your mortgage payments should be your last resort.”
While you may be able to hit pause on your mortgage you will have to repay the money later plus more in interest. A mortgage holiday could leave you paying thousands more in interest and possibly extend the length of your loan.
Finder research found that if you were 10 years in on a $500,000 loan with an average variable rate of 3.90 percent, pausing repayments for six months would cost you an extra $11,127 over the remaining 20 years of the loan.
On a $400,000 loan size with an average variable rate of 3.90 percent, you’d pay an extra $8,902 over the remaining 20 years.
“We would recommend looking into getting a better rate on your home loan first if you are struggling to make your repayments. While a mortgage deferral or holiday sounds appealing in the short term, you need to seriously consider whether you’ll be able to afford this ‘holiday’ in the long run," Ms Browne said.
“Refinancing your mortgage could save you enough to avoid having to pause your payments. COVID-19 has hit the economy hard but the silver lining is that home loan interest rates have never been lower.
“If your interest rate doesn’t have a '2' in front of it you need to start shopping around. There are hundreds of dollars to be saved simply by switching.”
Unsurprisingly, younger Australians are feeling the heat the most with one in four (26%) looking for ways to cut housing costs.
In comparison, only 10 percent of Gen X, and 1 percent of Baby Boomers are looking to their lender or landlord for help.
"During a time of economic uncertainty, Australians should look for ways to cut down their expenses and make sure that they’re getting the best deal on everything from their groceries, to their home loan interest rate," Ms Browne said.
Mpre information on Finder’s coronavirus mortgage support page.
FINDER ADVICE
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How to keep on top of your mortgage |
Refinance with your lender or switch for a better deal. The cash rate has fallen to 0.25% meaning interest rates are at an all time low. Now is the time to check whether there’s a better deal out there.