A mortgage can be a life-changing experience.
One day you don't have a care in the world, the next you are up to your eyes in debt and owning your own home.
It's a rite of passage that most people, eventually, go through.
For some though, a mortgage can become a nightmare. Last week's Herald Homes carried nearly five pages of advertisements for mortgagee sales, all printed in gloomy black and white, as if to draw too much attention to them would be unseemly.
As the recession bites and job losses mount, more people are finding the pain of servicing their mortgage difficult to bear. They are increasingly turning to professionals for help.
The message from mortgage brokers is "don't get sad, get even", and don't think that just because you signed away the next 30 years of your life, you are powerless to change your circumstances.
For those willing to take the initiative, there are ways to turn their fortunes around before banks call in their loans.
Plunging interest rates are persuading increasing numbers of people to bail out of existing mortgages and seek better deals, despite punitive break fees levied by banks.
And this week's 0.5 per cent cut to the Official Cash Rate, down to 3 per cent from a high of 8.5 per cent in June, will reinforce this trend further.
Mortgage broker Mark Jurgeleit from Meta Group says inquiries about switching mortgages have soared by 100 per cent in the past 18 months.
He says the mortgage market has altered "extremely dramatically" and homeowners have sought advice on how to flex their muscles.
John Bolton from Squirrel mortgage brokers says his company was offering free mortgage reviews to customers, but has been forced to introduce a $250 fee because it has been "swamped" with more than 1500 requests in the past two to three months.
Stressed homeowners who, in the past, would have mindlessly paid the interest year after year, are now being forced to snap out of their inertia - either to take advantage of the historic slump in interest rates, or simply to save their homes.
"It's like a different industry," agrees Kim Lyons from Be Mortgage Free.
"Unfortunately so many people borrowed heavily and property prices have come back. But people shouldn't settle for being in debt all their life and then go broke. We are quite passionate about that."
The brokers say there has been a passive "set and forget it" mentality among borrowers and their role is to show people they can control their mortgages, not be monstered by them.
"They just drift through," says Bolton. "Most people I meet just have that noose around their necks."
Lyons agrees. "We have found that people do think they are locked into a scenario. A huge number of people know there is a better deal but they can't be bothered finding out. "
All the brokers offer tips on how to lessen the pain of mortgage melt-down. "The buzz word is de-leveraging," says Lyons.
"When we look at people's past three months' transactions, they say 'I didn't know we were spending so much'."
He says it's vital to get overall debt under control. "But it's not a crash diet. You don't want to go into it for a month and then it all falls apart."
Bolton agrees that wasteful spending puts pressure on people struggling with mortgage payments.
"The amount of money people are pissing out the door is absolutely scary."
Once spending is under control, the most effective way to tame a rampaging mortgage is to cut interest payments. This involves not only a change in mindset, but facing up to punitive break fees charged by banks.
"On a mortgage of $500,000 it can be $50,000, up to 10 per cent of the loan amount," says Jurgeleit.
"I would encourage people to do the calculations
I've yet to see a bank waive a break cost; they don't want to open the floodgates.
"But your interest rate can be halved. The benefit you can derive is far longer than the remaining term of your existing loan."
Bolton says jumping ship to find a better interest rate is nerve-racking.
"Having to pay $30,000 break fees is a big decision, it's scary."
But is it worth it?
"Absolutely. A lot of clients make pretty good money out of breaking and riding down the interest rates."
The obvious advantage for people in financial difficulties or who lose their jobs is that the break cost can be added to a new mortgage to be paid off over time, whereas lower interest rates mean money in the pocket today.
It can also free up money to chip away at the loan principal. This can have a dramatic effect on the life of a mortgage, explains Bolton.
He helped one client rearrange his mortgage from 23 years to 12 years and then nine years.
"Psychologically that has a huge impact on people."
Steve McGowan from Be Mortgage Free points out that the details can be complex and homeowners have to "crunch the numbers. You need to work through that break-out pain."
Out of their fix
Claire Buckley and her husband have saved at least $5500 through breaking the fixed-term mortgage on their home on the North Shore's Hillcrest.
Early last year while they were building, they had fixed-rate loans between 8.5 and 9.7 per cent. Once building finished, most of the Buckleys' mortgage was on fixed rates above nine per cent.
As they watched interest rates tumbling, Claire calculated the cost of breaking their fixed-term loans to see if they could save money.
Although the break fee was $17,000, moving to a floating rate in January gave them a net saving of $5500 - and also let them cut six years off their mortgage's life.
"Our mortgage will now be paid off in 18 years instead of 24," Claire says, "and we are paying a whopping $1100 in principal off a fortnight instead of the ridiculous amount of interest we were paying."
Because they can afford to keep repayments the same, she estimates the shortened loan term will save them another $100,000 that they would otherwise have paid in interest.
How to survive your mortgage
The lowest rates are not necessarily the best, says Kim Lyons from Be Mortgage Free. If the deal locks you in too long, you may miss out on better rates ahead. And get good advice: "Plenty of mortgagee sales could have been avoided with some good advice."
Sort out your revolving credit better, advises John Bolton of Squirrel Mortgages. Avoid paying excessive interest on multiple credit lines. "It can become a blancmange. Make it more transparent." And his golden rule?
"Always split your fixed rate. You would be an absolute nutter to put 100 per cent of your loan on one fixed rate." He recommends having half the mortgage fixed on three to five years and half on no longer than two years, to take advantage of those swings and roundabouts.
"Be really clear in your communication with lenders," says Mark Jurgeleit of Meta Group.
"People get told no and think that's the end of the road. It helps to get your approach right the first time."
People in dire straits should also consider switching to an interest-only mortgage, or taking in a boarder, rather than lose their home to a mortgagee sale.
The mortgage market, interest rates and the lending sector have rarely been so dynamic and many people are waiting and watching for the best time to make their move.
Steve McGowan from Be Mortgage Free says people should consider six-month fixed-rate deals and certainly no more than one year. Asked where interest rates are going, Lyons admits: "The only answer is, we don't know." Watch this space.
A mortgage can be a life-changing experience.
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