After nine consecutive rate rises, and more on the horizon, many Australians are experiencing mortgage stress. While banks aren’t obligated to help, there are some options
n December 2021, 34-year-old Sally* bought her first property – a two-bedroom apartment in Melbourne. The pandemic had been “a really strange time” that made Sally laser-focused on improving her living situation.
It has been an extremely stressful and frustrating time. “It’s the younger generations who are being penalised by these interest rates – people who really struggled to get into the market in the first place,” she says. “The cost of goods and services have increased and everything these days is just so much more expensive,” says Victoria Devine, author of two millennial-focusedSo if you’re struggling with interest rate rises, what options do you have?Devine says you may be able to negotiate a lower interest rate with your current bank by speaking with them.
“There’s over 40 lenders in the market,” Peter says. “[Refinancing] can save some people $7,500 to $10,000 a year. Others might be as small as $2,000 or $3,000 a year. But when you accumulate that over the life of the loan … people are saving $50,000 to $200,000 in interest over the 30-year period.”Another option when refinancing is to change your loan term.
Getting approved for interest-only repayments may be challenging – Sally says she enquired about it and was told “there was a very low chance of me being approved, because they are really tightening the reins.” It is also not without administrative headache: “They sent me through the paperwork and said that it’s basically like reapplying for another loan”.If things are really tough, you could lodge a financial hardship application with your bank to request an amnesty period from payments.
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