#49; What Happens If You Can't Pay Your Mortgage?

With the cost of living and inflation at all-time highs, it's a real possibility that you might miss a mortgage payment- especially if you have over-leveraged yourself with other debts or decided to have a child (down to one income).

If you already have a mortgage and your interest rate is going from 2.5% up to 5.35% then your monthly repayments could be going up by around $800. That's on a mortgage size of only $500,000. Up by around $1600 per month on a $1,000,000 mortgage.

If you don't have a mortgage yet and are looking to buy then you might be worried that interest rates are still going to go up and paying a mortgage will become impossible; resulting in you just waiting and waiting and waiting to buy. The good thing here is that banks test your mortgage at an 8% interest rate now, so if they approve you and your financial situation doesn't change then you should be ok.

So what actually happens if you can't actually afford your mortgage?

Fear not- Chris and I go into the many options that you have well before the dreaded mortgagee sale. In fact, a mortgagee sale is the absolute last thing the bank wants to do.

Before that, there are interest-only periods, mortgage holidays, and other ways to make things manageable. Your quality of life might take a hit but that's ok - you probably spend too much on stupid stuff anyway ;)

Have a listen to this week's podcast to give you some peace of mind and then book a free strategy call with one of us HERE to talk about how we can help or start the process of getting you pre-approval for your first home.