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Mortgage Stress Calculator

Mortgage stress is spending 30% or more of your pre-tax income on home loan repayments

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Stress Free Zone
Stress Danger Zone
Mortgage Stress Zone
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What is mortgage stress?

While many of us measure mortgage stress based on our ability to keep up to date with household bills, the financial definition is spending 30% or more of your pre-tax income on home loan repayments as a rule of thumb.

What is a mortgage stress calculator?

The RateCity mortgage stress calculator is a useful tool to help home owners visually see if they have entered the mortgage stress zone, providing them with the most up-to-date information about their personal circumstances current situation.

Importantly, the mortgage stress calculator also helps predict how far away you are from entering the mortgage stress zone. The stress bar is broken up into three distinct colours pinpointing the percentage of pretax income spent on home loan repayments.

The mortgage calculator stress bar shows visually how far away you are from being classified as in mortgage stress.

Mortgage Stress Calculator test

Stress Free Zone:

The Stress Free Zone shows you are not in mortgage stress and are not likely to be in mortgage stress for some time; spending less than 20 per cent of your income on home loan repayments.

Stress Danger Zone:

The Stress Danger Zone shows you are close to the mortgage stress tipping point, but have not yet been classified as in mortgage stress. The Stress Danger Zone indicates you spend between 20 per cent and 30 per cent of your income on home loan repayments.

Mortgage Stress Zone:

The Mortgage Stress Zone shows you are already in mortgage stress, spending 30 per cent or more of your income on mortgage repayments.

Why are some Australians experiencing mortgage stress?

Australians are currently burdened with record levels of household debt, low wages growth and high property prices. The combination of factors is placing households under enormous pressure, with an increasing number of people falling victim to mortgage stress.

First home buyers are most at risk, particularly those who have recently purchased property in the inflated real estate markets of Sydney and Melbourne. However, the threat of mortgage stress remains real for anyone with an existing mortgage.

Despite the cash rate remaining at record lows, interest rates have begun increasing across the board, placing more pressure on household finances. As interest rates continue their steady climb back to normal levels, more Australians will be classified in mortgage stress.

By using a mortgage stress calculator, you can accurately assess your household situation, and plan ahead for any future interest rate rises.

The mortgage calculator stress bar shows visually how far away you are from being classified as in mortgage stress.

How can you avoid mortgage stress?

If the mortgage stress calculator shows you are in mortgage stress or have reached the danger zone, now is a good time to start assessing your financial situation.

To avoid mortgage stress, you either need to increase your income or lower your home loan repayments. Unfortunately, getting a pay rise is generally out of our control, but you can lower your mortgage repayments by switching to a more competitive lender.

First, start by comparing your current interest rate to other lenders on the market to see if you can get a better deal. Look closely at the monthly repayments and use our switch and save calculator to see how much you could save by refinancing.

However, home loans shouldn’t be chosen on rate alone. Weigh up each lenders package and consider which features suit your personal needs. Are you happy with a no frills home loan with a low rate? Or would you personally benefit from extras such as an offset account?

There are lots of factors to consider when you are refinancing, but when you find a great deal, the long-term benefits far outweigh the paperwork.

For those who returned a positive result on the mortgage stress calculator, switching to a more competitive lender could be the lifeline you need to reduce the pressure on your household budget.

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