Thousands of Australians struggle paying off their mortgages. According to the most recent Housing Occupancy and Costs report by the Australian Bureau of Statistics, 66 per cent of Australian households owned their own home with or without a mortgage in 2017 to 2018.
There are more homeowners with a mortgage, more than half of that 66 per cent. Today, households find it significantly more difficult to service a mortgage with only one income, when compared to 10-20 years prior. As a result, the number of households that require two income earners in order to function has become a necessity.
The high expense of living here in Australia amidst a mortgage crisis is changing our lifestyles and culture. However, it is possible to position yourself on better housing outcomes and keep the Australian Dream of Home alive.
Mortgage vs Rentvesting
Rentvesting is a viable strategy if you want to lower the risks of your investment and establish positive cashflow. The idea is you rent your investment property to someone else. But, you need to choose where you want to invest wherein rent rates are higher than mortgage repayments. You then live on a rental property instead of buying it with a mortgage because it is cheaper.
With this method, you can choose a better property to live in because you are not paying a mortgage, you are paying rent. You are then more financially secured when paying off your mortgage with the positive cashflow you get. Educated investors can also make money out of this strategy so you should consider rentvesting yourself. Rentvesting applies to most properties in the country no matter their price range.
Shut Off The Credit Tap
Another issue with household debt is that many people pay them off by calling on more debt. It might be a quick solution but it is not a way out. As reported by Digital Finance Analytics, more than a million of households are caught in this pit.
Mortgage stress is something we should resolve and not just adapt with. That is why we highly advise that you turn off the credit tap and to be honest it will not be easy. You need to be in it for the long haul and be open to accepting changes financially.
But that doesn’t mean a depressing lifestyle, the opposite actually. You are working towards a more viable future for you and your family. If you can, stay away from optional expenses as much as possible. Determine your financial priorities. At the same time, you are teaching your children about the value of money.
Take advantage of record-low interest rates vs mortgage
Back in October 2019, the Reserve Bank of Australia decided to reduce the interest rate by 25 basis points down to 0.75 per cent. With record-low interest rates, you should be on the phone with your home loan provider discussing lower rates.
By the way, that 0.75 per cent interest rate is expected to reduce later in 2020. It is vital that you take action right now.
If your bank is not meeting you halfway then feel free to seek assistance from someone else. Do the research and determine the best bank or provider to seek refuge from. It is also important to know that you can renegotiate the terms and conditions of your loan with your bank to suit your financial status better.
The Australian Banking Association said this is a way to restore people’s financial position.
Australian Dream of Home – not a Nightmare
For some, the Australian Dream of Home is a too far away to grasp, but it doesn’t have to be. Speaking with a local investment or first home specialist can render you opportunities that you just can;t get with the traditional measures.
Gallery Group has relationships with investment and first home specialists across Australia that can help. Talk to us today to learn more about how you can get into the market, and flourish.