Planning the key to managing the mortgage with a new Family

Many couples juggle mortgage repayments with bringing up a baby on a single income, but a little planning goes a long way in helping new parents ease the financial burden. This includes considering how to utilise paid maternity leave, annual and long service leave, and one-off payments – such as the baby bonus – to minimise any stress associated with managing finances once the baby arrives. Ideally, the time to start planning is when you decide to become, or find out that you are going to be, a parent.

While there are a number of options on offer by lending institutions, it is important to seek advice to find solutions for your unique circumstances. Not all of the options on offer by lenders will work for you – and they do vary considerably from bank to bank. A prime example is payment honeymoons – or holidays – which are available to some borrowers, depending on the loan type. For those who do have the option, generally speaking, access is dependent upon the amount of prepaid funds you have accrued. For example, if you’ve been paying extra into your loan for a while and accrued $20,000 in your redraw facility, it is these accrued funds that will fund your payment holiday. Once these funds have been exhausted, the payment honeymoon is over.

Switching to interest-only repayments could be another option. While some borrowers may be able to switch to interest-only repayments, it’s important to remember that the loan is still expected to be paid out in (usually) 30 years. So if you are not paying any principal for a while, this will have an impact on your minimum repayments when you revert back to principal and interest. This will be an important factor in your decision to use this tool.Another essential consideration is whether to fix or not. Factors that will effect your decision include the length of time you’ll be on one income, the income amount, and whether or not you have ongoing additional expenses, such as a car loan or medical costs.

Taking time to weigh up the pros and cons, making the best use of one-off payments and considering your unique circumstances are all important in developing a plan that will ease the financial burden and, in turn, help you to enjoy your time with your new baby.