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Clever Ways to Service Your Mortgage When Money is Tight, From a Financial Adviser

paying your mortgage when money is tight

With the inflation rate recently surging to 5.1 percent in the last year and the cash rate increasing for the first time in 11 years, there is understandable concern among Australian homeowners over their ability to service their mortgage. It is more important than ever for Australians to plan ahead and prepare for a significant increase in their cost of living.

With uncertain financial times and potentially costly home loans on the way, I offer 6 ideas to help you increase your income and service your mortgage, stress-free, in 2022.

1. Maximise your tax refund. When completing your tax return, you can claim deductions for certain expenses related to your job role and income, which are used to help maximise your tax refund amount. Popular out-of-pocket expenses directly related to your income such as travel costs, car expenses, clothing and dry cleaning or self-education expenses can contribute greatly to your tax refund, as long as you keep your receipts. If you work from home, expenses such as electricity for heating, cooling, or lighting, internet and phone bills or even a decline in the value of furnishings or items used for work can be claimed back in your tax return.1 If you are unsure what to claim for, you can engage a registered tax agent to identify all the deductions you may be eligible for, which is another tax-deductible service. Learning how to maximise your tax refund will be a great advantage toward long-term savings goals and servicing your mortgage this coming year. 2. Create a budget for the new financial year. A budget plan is a crucial part of an effective financial plan and can be created to track short, medium, or long-term financial goals. You can use a budget plan to save money or assess long-term goals, such as repaying your mortgage. A budget plan will be the best way to see how much money you have coming in and going out each week, fortnight, month or year – and help you find ways to both save money and carve out extra time to increase your income.

3. Shop around for the best home loan. A mortgage is an enormous financial commitment, and even the slightest variation in interest rates can add up over time. Refinancing your home can be a great way to save a considerable sum of money so it is important to make sure you have done your research on the best deals available. Digital mortgage comparison services provide a good understanding of the best market rates across all banks and other financial lenders. Most lenders have loan calculators on their website to help you understand how the repayments will work over time, to ensure you save the most money now and in the long term. However, there may be some refinancing fees to keep in mind, such as start-up, break, or application fees. Or if you currently have less than 20% equity you should ask your lender if any mortgage insurance will apply, as this cost can negate the financial benefits of switching loans. 4. Is it financially beneficial to rent out your home? Crunch the numbers and determine if it is cheaper – and feasible – to rent out your home and live in a rental. Will the rent pay the mortgage in full or more – and leave you with more money in your pocket after paying rent in your new home? Take into account that you will need to declare the rent as income, and this will be taxed. If so, this could be a great way to minimise your costs in the short term, either to cover part of your mortgage while you build a backup plan, or pay it off entirely if you enjoy your change in living situation. It is important to consider whether moving out would force you to pay capital gains tax on the property – you must have lived in the house as a primary residence for 6 months and may only rent the property for a maximum of 6 years to avoid this tax. Also ensure you take into account any factors that may influence other extra moving costs, such as further transport costs, more expensive local shops, and rates. 5. Work together as a family. If your adult working children aren’t paying board, now is a good time for them to begin learning how to manage their own mortgage in the future. It can also serve as an opportunity to teach them about equity, mortgages, and interest at the same time. As for how much, consider a starting area of around 10-20 per cent of their income, if they are able to provide it and work full-time. Your children will also be encouraged to learn how to save money and start planning for future home ownership.

6. Use unused rooms as a second income stream. If you live alone, or with a partner, consider renting out a spare room. You could also consider turning that room into an Airbnb. Ensure you fully understand the responsibilities that come with renting out a room, and consider how it may impact your ability to work from home if you are adapting to a new type of hybrid work environment. There are other websites you can consider, such as Trusted HouseSitters, which provides a more in-depth screening process for increased homeowner security. I recommend speaking to your accountant before renting out unused rooms through an online platform to find out what income is taxable, what expenses are tax deductible, and any potential capital gains tax issues to consider. 7. Create a second income stream. Many of the most financially successful people have multiple income streams. Whether you are interested in a passive income project, you’d like to run a new business, or you just want some extra work hours, a second income stream can be a great way to get you through when money is tight. Selling your designs and photography online or creating an online course to share through platforms such as Skillshare or Kajabi is a great way to make passive income. If you’re looking to create a low financial risk business, writing a blog, or creating a social media channel has proven potential for financial success. If you have more time to work, driving for uber, taking paid online surveys, or recycling cheap furniture from Facebook marketplace are other great ways to increase your income.

With a solid budget plan, a maximised tax refund, and some clever use of the available space in your home, you can ease the pressure on your mortgage payments and turn 2022 from a year of financial uncertainty into homeowner security.


Helen Baker

About Helen Baker

Helen Baker is a financial adviser, author, speaker and spokesperson for online finance information platform Helen has a passion for empowering Aussies to find financial freedom through strategic planning and goals-based financial advice. She has worked as a qualified financial adviser since 2009 and was a finalist in both the Financial Planner/Advisor of the Year and Women’s Community Program of the Year categories in 2017 as well. For more information, visit


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