Tips and Tricks

Question and Answer with Shannon Post - Financial Counsellor with YFS

Current Housing Crisis

What are you seeing at YFS in relation to the current housing crisis?

At YFS our intake and assessment team - YFS Connect are seeing many crisis situations due to Homelessness. Many people were already experiencing financial stress and issues relating to their housing situation. Now even more people are displaced in the community due to the recent floods. Logan currently has very scarce housing options available, and our Connect Team are struggling to find emergency housing options for people as many of the short-term accommodation options have no vacancies. We are guiding people to try marketplace, Gumtree and community pages on facebook as well as estate agents.

What is the trend at the moment that Financial Counsellors are seeing and dealing with?

Recently I’ve been seeing many people struggling with their mortgages. Whether its high Council rates arrears or they are behind in paying Body Corporate fees or are struggling with mortgage payments, it seems many people are in mortgage stress. I’ve got clients who are housing their adult children due to lack of options for rentals in the area and then this is adding to their financial stress as their adult children aren’t contributing enough to cover the mortgage or even household expenses. I’ve got another client with thousands owed in Council rates and no way to pay as they are on a Pension. It is often a double-edged sword in the sense that if they sell, they would be then paying more in rent or wouldn’t be able to find a rental in this current housing crisis.

What are some of the issues with having a mortgage?

There are several things that can go wrong with a mortgage and some of these are completely out of their control:

Cost of living can go up especially with the current high fuel prices

A change in interest rates can have a real impact on the family Budget

Many things can happen in the 25 year loan timeframe – loss of employment and relationship breakdown are two main causes of Mortgage Stress that we see at YFS and now the recent floods are adding a further complexity to the current housing crisis

I’ve seen people who have lost everything in the floods and weren’t able to afford house and contents insurance so there are many desperate people in our community

 

If people are struggling to make their mortgage repayments what should people be aware of?

As it is a secured asset it’s important to know that interest will not stop. In some cases, it might be time to start making some difficult decisions. It is currently a Sellers’ market so it might be time to sell. Many loans now don’t have any fall-back option as their offset accounts may have been used to make mortgage payments or to live on during periods of reduced income. Any period of hardship will increase the mortgage balance. Some families would be feeling quite vulnerable and financially stressed during these difficult times. Its important to reach out to a Financial Counsellor for some support as you never know what other options could be available to you.

What are some options if people don’t feel they will be able to afford the mortgage in the foreseeable future? 

I have seen many clients get very creative with options that improve their financial situation. Some are now looking at renting rooms out in their house or doing Air BNB. Even renting a shed out that can be used for storage for someone else can bring in some income. Some on Aged Pensions are coming out of retirement to go back to paid employment or apply for a Home Equity Access Scheme which can boost your Pension for a period of time. You could even consider renting your house out for a while and finding cheaper alternative accommodation. I’ve also had clients who have had a drop in wages or inconsistent shifts offered by their employer apply for Centrelink income to assist when hours have decreased. Even requesting a reduction in your interest rate or going on interest only for a short time might reduce your monthly mortgage payment.

What kind of things would a Financial Counsellor look at for people in Mortgage Stress?

We often start with a financial assessment which involves a Budget. Sometimes people don’t realise they can make a lot of changes to their day to day living costs that can free up funds to make the mortgage a priority.

  • Hardship on Credit Cards involves a freeze on interest, so this is a much better option than hardship on the mortgage

  • Using Emergency Relief for food and other essential costs – a comprehensive list is on the YFS website

  • Check eligibility for a Home Energy Emergency grant for your electricity account, check your concessions and ensure your on the best offer – this can save up to $1000

  • Negotiating with your local Council about your rates

  • Reducing insurances and phone plans might help.

How else can Financial Counselling help people in financial stress?

There is a lot of myths floating around about what Financial Counselling is. It’s important to note that Financial Counsellors don’t tell you what to do with your money, our job is to give you options to relieve financial stress. The decision is ultimately yours. We also assist with putting options into action with your consent of course. Often, we can get really good outcomes from negotiating with Creditors. Options might include:

  • Putting debts on hold or lowering repayments for a period of time and in some cases full debt waivers

  • Workplace Development Orders for SPER debt

  • Linking you in with other supports and services like our SPARK program that assists women to find employment

  • Referring you for a no interest loan or a NILS4CAR Loan if that is what is needed

  • We also can assist with Super withdrawal or applying for Bankruptcy   

Any Final Tips?

If housing is an issue and you are stressed about your financial situation than please don’t hesitate to seek help. There are always options but it’s important to act quickly. You can contact a free, independent Financial Counsellor who can share with you your rights and outline your options. In Logan you can call YFS on 38 26 1500 or call the Debt Hotline on 1800 007 007.