A survey by comparison website Finder found 15% of Australians are struggling to pay their mortgage and rent, and have asked for a rent reduction or pause in their mortgage repayments.
Younger Australians were struggling the most, with 26% looking for ways to cut housing costs, while only 10% of Gen X and 1% of Baby Boomers looking for help.
Kate Browne, personal finance expert at Finder, said it was important to assess the options available.
“Whether you own your home or are renting, it’s time to re-evaluate your expenses and see where you can cut down,” Browne said.
“If you have a home loan, a pause in your mortgage payments should be your last resort.”
A mortgage pause meant you would repay the money later with more interest, and potentially extending the length of the loan.
Finder found that 10 years on a $500,000 loan with an average variable rate of 3.9% would cost an extra $11,127 over the remaining 20 years of the loan, if it was paused for six months.
“We would recommend looking into getting a better rate on your home loan first if you are struggling to make your repayments,” Browne said.
“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. 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.”