5 Ways Living Expenses Impact Mortgage Sustainability

Brad Smith
Written By Brad Smith

Navigating the world of homeownership can be daunting, especially when you’re already neck-deep in a tonne of other financial obligations.

That said, if you’re already committed to a mortgage, or have just recently secured a mortgage agreement, you have no other choice really but to prioritize a large chunk of your monthly income to pay off the binding repayment fee.

That doesn’t make it any easier though. Juggling mortgage repayment and other housing costs can be a struggle for many budget-strapped homeowners. This is especially true if you’re using borrowed money for the mortgage or are low on cash.

If you want a clearer glimpse of how your daily expenses affect your ability to pay back your mortgage, read this article for a more complete picture.

Let’s begin!

5 ways living expenses impact mortgage sustainability

What is Mortgage Sustainability?

Mortgage sustainability refers to the long-term capability of a homeowner to fulfill their mortgage obligation without encountering financial strain.

A sustainable mortgage is one that the homeowner can manage and pay off in time, taking into account their salary, living costs, and other financial obligations. Assessing this sustainability is crucial for both lenders and borrowers. 

From the lender’s perspective, it minimizes the chance of the borrower defaulting and not paying their binding amount. They can’t lend out to just anyone.

For homeowners, a sustainable mortgage ensures they won’t end up in scenarios where they can’t keep up with their mortgage dues, potentially leading to property repossession or monetary challenges. 

Mortgages can come in different terms and figures. Before settling on any contract, be sure to find the following terms of the mortgage agreeable:

  • Interest rates
  • Loan terms
  • Property taxes
  • Insurance costs

Once you confirm your ability to pay these fees on your mortgage, you’re pretty much set. If the terms are unfavorable for you at the moment, don’t be afraid to decline and seek better opportunities or wait until you’re in a better financial situation.

Regardless of your decision, be sure to thoroughly calculate your living expenses using a home loan living expense calculator like this one here. This way, you’ll ensure that all your decisions are backed by data and not on impulse.

The Ways Living Expenses Affect Your Ability to Pay Back Your Mortgage

Your mortgage and housing costs should, as a rule of thumb, be no more than 28% of your gross monthly income

Any fraction larger than that can cause great financial strain and can make it difficult for you to pay back your housing debt, which can spiral into an even larger total amount from the increased interest rates.

That said, many things can get in the way of your ability to pay back this debt, and a majority of them fall under one large umbrella: your living expenses.

Here are five ways your living expenses can inadvertently hamper your ability to pay back your mortgage.

1. You May Incur Expenses for Child Care

Mortgages can last for quite a long time, with short ones lasting for at least 3 years and longer ones reaching up to 40 years. 

A lot can happen in your life during that period. You could have a partner living with you, have a child, have a second one, a third—you get the point.

Within that timespan, your living expenses (and lifestyle in general) can undergo some massive changes. Even if you have opted for the more stable and predictable fixed-rate mortgage scheme, the other living expenses can take a toll on your financial well-being.

For instance, you could be spending hundreds of dollars more for your child’s food and education. You will also have to pay more for their extra-curricular activities and daycare.

If you have multiple children, this figure can rise dramatically. 

If you aren’t careful, you may not have enough money to cover your mortgage and would end up having to apply for another loan, which can lead to adverse consequences if you’re unable to pay the interest rate.

2. Utility Costs May Rise

Historically speaking, electricity, fuel, and internet bills tend to increase over time. 

In fact, the world is still experiencing the direct effects of the Ukraine-Russia war with a limited fuel supply.

If your budget has been strained to begin with, these incremental costs can make it significantly more challenging for you to pay off your mortgage.

Not to mention, unpredictable weather patterns and climate change can lead to higher expenses in both heating and cooling, further stretching your monthly budget.

3. Lifestyle Inflation

When you progress along your career, it’s easy to fall under the trap of spending more—a term we all know as lifestyle inflation. After all, you’re simply reaping the fruit of your labor, right?

While it’s okay to splurge every now and then, opting for luxury items, indulging in more vacations, and eating in fancy restaurants can all take a toll on your ability to pay off your mortgage.

The reason why this phenomenon is so common is that many people develop a misconstrued and overinflated idea of how much they’re actually earning. This, in turn, can foster a tendency to level up their lifestyle and go for more lavish items and activities.

Instead of spending your salary immediately, it’s wiser for you to use your spare money to make advance payments towards your mortgage to decrease the interest burden of it once you paid off the entire principal amount.

4. Debt Accumulation

Since a mortgage can stretch out for potentially decades, you’re more than likely going to be making a couple of major financial decisions during that period. 

Whether it’s due to emergency medical expenses, vehicular repairs, or a desire to take further education, taking on additional loans or credit card debt is a looming possibility for your future self.

In such cases, you’ll be increasing your debt load per month, which can affect your ability to pay off your mortgage if you’re not watchful over your expenses.

Furthermore, having multiple debts at once can create a bad look for other lenders. This can decrease your opportunity to get loans at favorable deals, which will thereby feed into a vicious cycle of you paying more with each new debt you accrue.

5. Frequent Homeownership Costs

If you haven’t owned a home before, you likely never had to deal with repairs and maintenance fees. Now that you have the keys to your new home, this norm has changed and you’re expected to maintain the livability of the house, from the plumbing to the flooring and tiling.

That said, this living expense can cost up to 4% of your total house value per year. This amount can get even higher the more antiquated your house becomes.

Becoming a homeowner makes you responsible for maintaining the homeliness of your house, and that can be costly to the point that it affects your mortgage. 
As such, be sure to buy a house that is built on a solid foundation made from durable materials. Also, design the interior with the appropriate furniture to make it look clean while still remaining timeless and sturdy.

smith brad omni

Written by Brad Smith

CEO & Lead Interior Designer

Brad Smith is an experienced interior designer and the founder of OmniHomeIdeas.com. With a Master's degree in Interior Design from Pratt Institute and a passion for creating safe and healthy living spaces, Brad shares his expert insights and innovative design ideas with our readers. His work is driven by the belief that home is where every story begins.