Homeownership is often touted as the Australian dream, but for many, it can turn into a financial nightmare. As a caring friend, you might notice subtle changes in a friend’s behaviour or lifestyle that hint at underlying financial stress. This guide will equip you with the knowledge and tools to support a friend who may be grappling with mortgage stress, without overstepping boundaries or offering unsolicited advice.

Understanding Mortgage Stress: More Than Just Numbers

Before you can offer meaningful support, it’s crucial to understand what mortgage stress really means. While financial experts often define it as spending 30% or more of household income on mortgage repayments, the reality is far more nuanced.

Mortgage stress isn’t just about percentages—it’s about the toll it takes on your friend’s quality of life, mental health, and overall well being. It’s the constant worry about making ends meet, the guilt associated with small indulgences, and the fear of losing one’s home.

Signs Your Friend Might Be Struggling:

  1. Social Withdrawal: They’ve started declining invitations to social gatherings, often citing vague financial reasons.
  2. Changes in Spending Habits: You notice they’ve drastically cut back on non-essential expenses they once enjoyed.
  3. Increased Anxiety When Discussing Finances: Money talks trigger visible discomfort or defensive responses.
  4. Taking on Extra Work: They’ve started driving for Uber, a “side hustle” or are working as much overtime as they can squeeze into a week.
  5. Neglecting Home Maintenance: Minor repairs are being postponed, potentially leading to bigger issues down the line.
  6. Discussing Downsizing or Selling: They’ve mentioned considering moving to a smaller home or a less expensive area.
  7. Relationship Strain: You’ve noticed increased tension between them and their partner, often around financial topics.

The Broader Context: A National Issue

It’s important to understand that mortgage stress isn’t an isolated problem. As of 2023, approximately 1.1 million Australian households are experiencing some form of mortgage stress. This knowledge can help your friend feel less alone and potentially more open to seeking help.

How You Can Support Your Friend

  1. Be a Compassionate Listener
    • Create a safe space for your friend to express their concerns without fear of judgement.
    • Practise active listening: pay attention, show you’re engaged, and ask thoughtful questions.
    • Avoid offering immediate solutions; sometimes, people just need to be heard.
  2. Educate Yourself
    • Check with your mortgage broker for current interest rates, housing market trends, and Google financial assistance programs.
    • This knowledge will help you understand your friend’s situation better and potentially offer more informed support.
  3. Encourage Professional Help
    • Gently suggest speaking with a financial advisor or mortgage broker.
    • Offer to help research reputable professionals or even accompany them to an initial consultation.
  4. Provide Practical Support
    • Offer to babysit if they need time to meet with financial advisors or work extra hours.
    • Share money-saving tips or resources you’ve found helpful.
    • If you have relevant skills (e.g., budgeting, financial planning), offer to help directly.
  5. Maintain Normal Social Connections
    • Continue to include them in social plans, but be mindful of costs.
    • Suggest budget-friendly activities: host a potluck dinner, organise a group picnic, or have a family movie night at home with popcorn.
  6. Share Resources Tactfully
    • If you come across helpful articles or tools, share them casually without pressure.
    • Frame it as “I saw this and thought of you” rather than “You need to read this.”
  7. Be a Positive Influence
    • Share your own experiences with financial challenges and how you overcame them, if applicable.
    • Highlight their strengths and remind them of past challenges they’ve overcome.
  8. Respect Boundaries
    • Remember that while you can offer support, their financial decisions are ultimately their own.
    • Avoid pushing too hard or offering unsolicited advice.

Guiding Your Friend Towards Solutions

While it’s not your responsibility to solve your friend’s financial problems, you can gently guide them towards potential solutions:

  1. Refinancing: Suggest exploring refinancing options with a trusted mortgage broker. This could potentially lower their interest rates or adjust loan terms to better suit their current situation.
  2. Budgeting and Expense Tracking: Offer to help them create a comprehensive budget or introduce them to user-friendly budgeting apps.
  3. Income Boosting Strategies:
    • Brainstorm ideas for increasing their income through career advancement, side hustles, or passive income streams.
    • If you know of job opportunities, share them thoughtfully.
  4. Building an Emergency Fund: Emphasise the importance of having a financial buffer for unexpected expenses.
  5. Seeking Government Assistance: Help them research any available government programs or financial hardship assistance they might be eligible for.
  6. Downsizing or Renting Out Space: If appropriate, discuss the pros and cons of moving to a more affordable home or renting out a spare room.
  7. Debt Consolidation: If they have multiple debts, suggest looking into debt consolidation options to potentially reduce overall interest payments.
  8. Professional Financial Guidance: Encourage them to seek advice from experts who can provide tailored solutions. Companies like Pinpoint Finance specialise in helping people navigate complex financial situations, offering services such as financial situation assessments, exploring loan options, and assistance with refinancing.

The Importance of Self-Care

Remind your friend that taking care of their mental and physical health is crucial during times of financial stress. Encourage them to:

  • Maintain a regular exercise routine; this doesn’t have to include going to the gym or pilates it could be as simple as going for a short 20 minute walk
  • Practice stress-reduction techniques like meditation or deep breathing
  • Seek counselling if the stress is significantly impacting their mental health (let them know that some lenders offer access to free counselling services)
  • Maintain a balanced diet and adequate sleep

Being the Friend They Need

Remember, your support can make a significant difference in your friend’s life during this challenging time. By offering a listening ear, sharing helpful information, and encouraging professional help when needed, you’re helping your friend navigate their way from mortgage stress to financial stability.

Your friend’s home should be a source of comfort and pride, not a burden. With your support and the right resources, they can work towards making their homeownership journey a positive one.

Here’s to being a great friend and helping turn someone’s mortgage stress into mortgage success! Your compassion and support could be the catalyst that helps your friend regain their financial footing and peace of mind.