If you are facing a big mortgage, there are a few things you can do. Photo / 123RF
Sometimes it seems like no matter how much money you earn, it's never enough. It was reported recently that even some households earning $150,000 a year say they don't have enough money coming in to cover their costs. For someone who's existing on the pension or minimum wage, that probably
seems mad.
But I think there's one key aspect of most people's financial lives that's to blame for the squeeze — and it's not an inability to budget or spending. It's over our heads.
House prices have rocketed in recent years, and if you weren't in the market before they took off, it makes a big difference to how much money you need to survive.
Someone on the pension with a paid-off house might now be in a position where they can feel more comfortable than someone earning $150,000 with a big mortgage and a few kids to wrangle.
About 40 per cent of new mortgage borrowers take out loans that are five times their annual income or more. A typical first-home mortgage is more than $400,000 — and more in some centres. That's a lot of debt to start out life with and to have to commit to servicing for the next couple of decades.
