Dealing with financial challenges, especially in times of high inflation, soaring prices of essentials goods and services, and rising interest rates, while incomes remain stagnant, can feel like sinking in quicksand. However, there are actionable steps to ease the pressure and navigate these uncertain times without sacrificing your financial stability!
Optimize Loan Structure
Explore refinancing options across different banks.
Compare mortgage rates and consider leveraging a savvy mortgage broker to review your financial scenario.
If you are not sure whether your mortgage rate is competitive, there are a number of sites on google that do the comparisons for you to see if your rate is fair.
Finder: Finder.com.au is a popular comparison website in Australia that allows users to compare mortgage rates from various lenders. They offer tools to compare interest rates, fees, and features of different home loan products.
Canstar: Canstar.com.au is another platform in Australia that compares home loan interest rates, fees, and features from different lenders. They provide ratings and detailed information to help users compare mortgages.
RateCity: RateCity.com.au offers comparisons of Australian home loans, including interest rates, fees, and features. Users can search and compare various loan options based on their preferences.
iSelect: iSelect.com.au provides tools for comparing home loans, including mortgage rates and features, allowing users to find and compare different offers from lenders.
Mozo: Mozo.com.au is a financial comparison website that includes home loan comparisons. Users can compare interest rates, fees, and other aspects of various home loan products available in Australia.
These websites specialize in Australian home loans and mortgage comparisons, providing tools and information tailored to the Australian market. Always ensure that the information is up-to-date and consider contacting the lenders directly for the most accurate and current details regarding mortgage rates and terms in Australia. This landscape is forever changing. A quick calculation of a lower rate compared to your payments at the higher rate, will quickly tell you it’s worth the investigation.
A Savvy mortgage broker can also crunch some numbers and assess your financial situation to see if this is a possible solution. If you can refinance your mortgage to a lower rate, consider rolling any high interest personal loans or credit card debts into the refinance or ask your broker if you can access the equityin the proeprty and take out some cash to pay down some bad debts to lower your overheads.
Principle & Interest Loan V’s Interest Only
Another option is to go from a Principle and Interest loan to an Interest Only loan. This would really cut down the amount of the monthly mortgage, even if it were only for a short period of time.If your loan is a Principle and Interest Loan set up, ask your bank if you can go to an Interest Only loan. Some banks can do this without a “refinance” process which means less time and less paperwork. Other banks may want you to go through the refinance process which could take anywhere from 3-4 weeks to a few months (depending on the bank).Another option is to ask your bank if you can just pay the interest part of your mortgage for a period of time.
Be aware to ask the right questions around this these types of mortgage adjustment requests to your bank.
some good questions to ask would be:
- “Do I have to pay the Principle back after the period of paying the interest only?” – this is a big one as you don’t want to create a bottle neck of debt at the end of the time frame if you cant see anyway of paying this back after. The bank may have to adjust the time frame on your original loan.
- “Will this damage my credit rating” or
- “will it show up in my credit report?” If you can, make sure this does not happen (you might be able to negotiate this with the bank (and get it in writing) as this will have longer term consequences later on down the track when you are in a better situation and want to loan again or to refinance. If the answer to these questions is yes, then I would hesitate to move forward with this.
Know that all these options above do come with consequences, so make sure you ask questions, do your calculations, and get back paying down your mortgage as soon as possible.
Once thing for sure, don’t not pay anything. Contact your bank if things get that bad that the mortgage cant be paid. Your bank may be able to arrange a Financial Hardship package for you or worse case, a “Mortgage Repayment Holiday”. Be aware to read the fine print in each of these changes to your mortgage, as you need to be aware of how long and how this will influence your mortgage amount and payments in the future.
Leverage Unwanted Items
Leveraging unused and forgotten goods. Consider selling unused or unwanted items through online platforms. Generating quick cash from these sales can provide a much-needed supplement to cover essential expenses during tight financial periods.
People often sell a variety of items on online marketplaces. These items can range from practical to unique and often reflect current trends, consumer interests, and popular categories. Some popular and favorite things that people sell on online marketplaces include:
Electronics: This includes smartphones, laptops, tablets, gaming consoles, and accessories. People often upgrade their devices, leading to the sale of used or older models. Kids these days move from one favourite shiny thing to the next, and leave the old to gather dust in the cupboard.
Clothing and Accessories: Secondhand or vintage clothing, designer items, shoes, handbags, and accessories are commonly sold on online platforms. People make business out of this stuff! Time to get those unused frocks and suits out of the back of the closet.
Home Goods: Items for home decor, furniture, kitchen appliances, bedding, and DIY tools are frequently listed for sale. I bet you have an old juicer or a near new appliance that you don’t use often at all you can sell?
Collectibles and Antiques: Vintage items, collectible toys, coins, stamps, and unique antiques attract collectors and enthusiasts.
Fitness Equipment: Exercise machines, workout gear, yoga mats, and other fitness-related items are often sold, especially during health and wellness trends. We saw a lot of these items go for sale after the pandemic.
Toys and Games: LEGO sets, board games, action figures, and collectible card games are popular items sold, especially among families.
Crafts and Handmade Items: Handcrafted jewelry, art, homemade crafts, and unique handmade items cater to buyers seeking personalized or artisanal products. Thinking of starting that side hustle? Now may be the time.
Vehicles: Used cars, motorcycles, bicycles, and parts/accessories for these vehicles are commonly listed on online marketplaces.
Books and Media: Secondhand books, DVDs, vinyl records, and other forms of media often find their way onto online marketplaces.
The variety of items you can put up for sale on online marketplaces is vast and diverse, catering to a wide range of interests and needs within different communities and demographics. Always exercise caution and ensure the legitimacy of buyers, but its a great way to not only bring in a bit of spare cash, it can help declutter your spaces. You never know, you might be able to rent out that spare room after!
Consider Increasing Income
Explore Income Enhancements. Initiate a dialogue with your employer regarding potential salary increases. Highlight your contributions and value to the company, as this conversation could lead to a positive outcome.
Additionally, explore additional income sources like part-time jobs or freelance work to bolster your financial bottom line.
Maintain a Long-term Perspective
Understand that these actions are short-term solutions, and more than likely so is your financial situation a short term challenge at the moment. But if your financial challenges persist, remember, addressing financial stress proactively is crucial to prevent it from spiraling into a larger problem. Seeking professional advice remains paramount in safeguarding against potential long-term consequences on credit ratings or mental well-being.
