There are figures that show that people well into their 60’s are expecting to have really big mortgages. Although this may surprise some people, his has been a growing trend. Most lenders nowadays will approve your loan even if you’re 75 years old and potentially older. This is mainly if they have a suitable exit strategy such as sufficient superannuation or other investments. A thing that has changed recently is that Australians have been very quick to grab interest only home loans for their own occupied homes. Historically, this has not been the case. This is probably to help them live the lifestyle they want and help reduce their mortgage repayments. However, this translates into a point in 3 to 5 years time where they haven’t paid off any principal on the loan. Some people even renew their interest only period. They then tend to live off this cycle of interest only home loans. They will then get to a point where they are close to retirement and realise they haven’t actually repaid any of their debt. To make things worse, the interest only period gets harder to renew the closer you are to retirement. This is especially the case for home loans. Therefore moving forward as an industry, we should try to encourage people to pay down their debt as soon as possible.
Managing household finances can be a big responsibility! Keep reading to find out how to minimise the stress and become a pro at managing those finances!