If you are feeling the pinch when it comes to the cost of living and paying your mortgage, you are far from alone.
Housing, food, utilities and transport are taking an increasing share of household budgets. Even full-time workers, especially on lower incomes, can have little left after essential expenses are paid.
Most Hungarian homeowners with mortgages remain relatively protected from higher borrowing costs by fixed-rate loans. But rising living costs can still make an otherwise manageable mortgage increasingly difficult to carry.
So what can you do?
Recognise the Warning Signs
There is no official definition of mortgage stress, but several warning signs are worth watching.
Are you struggling to pay utility bills? Does more than 30% of your pre-tax income go towards your mortgage? Are you struggling to clear credit-card debt?
Also think about expenses coming down the track. Are you expecting a baby and worried about how you will cover the additional costs? Are you planning a wedding? Do you need to replace your car or make another large purchase that you don't currently have the savings to cover?
If you answer yes to several of these questions, it may be time to take a closer look at your finances.
When Two Incomes Become One
A separation, for example, can have a major impact on a household's financial capacity.
“Going from two incomes supporting a mortgage on the family home to a single income can quickly create a financial shock that sets people back years,” says Alex Markus, Chief Executive, City-Lets Ltd.
“Many people either don't have enough borrowing power to buy out their former partner, or they can't service the mortgage repayments on the family home on their own.”
Selling can create another problem. Once the equity is divided, both people have smaller deposits and need to fund separate households. In some cases, former couples continue living together because neither can afford to buy out the other or establish a new home alone.
Find Out What You're Actually Spending
People often underestimate their expenses.
Track everything for a month using a spreadsheet or budgeting tool: mortgage, food, utilities, common costs, transport, insurance, subscriptions, childcare and other debt repayments.
Then look for recurring expenses that can realistically be reduced.
Cutting takeaways, bringing lunch to work, cancelling unused subscriptions or temporarily reducing discretionary spending can release money without changing the mortgage itself.
Don't forget larger predictable expenses that don't arrive every month, such as annual insurance, car servicing or major home maintenance. Budgeting for them in advance can prevent a known expense from becoming a financial emergency.
Set up an automatic monthly transfer into savings if your budget allows. An emergency reserve gives you more room to deal with illness, loss of income or an unexpected major expense without immediately falling behind on the mortgage.
Check Your Mortgage
A mortgage that was competitive when you signed it may no longer be.
Ask your existing bank what it can offer and compare it with competing lenders.
Refinancing can reduce repayments or interest costs, but calculate the saving after valuation, legal, banking, early-repayment and other switching costs.
If you have surplus savings beyond your emergency reserve, additional mortgage repayments can reduce the principal and future interest bill. Check your contract first for early-repayment fees.
For anyone taking out a mortgage now, don't treat the maximum amount a bank will lend as your personal budget.
Leave room for higher living costs, children, periods of reduced income and unexpected expenses.
Speak to Your Lender Early
If you are already struggling, contact your bank before you start missing repayments.
“One option might be consolidating your loans, but it could be that the mortgage stress is temporary, in which case you wouldn't consolidate,” says Markus.
“You might instead speak to a financial adviser to help with your budget.”
Depending on the circumstances, a lender may be able to restructure the loan. Extending the term can lower monthly repayments, although it normally increases the total interest paid.
Temporary repayment relief may also be available in some circumstances.
The important thing is to act while you still have options.
Know what you're spending, keep an emergency reserve where possible, make sure your mortgage remains competitive and speak to your lender early if the numbers stop working.