With about 880,000 households getting closer to tumbling over the mortgage cliff when low fixed rate home loans turn into variable rate loans, with monthly repayments for many potentially tripling, the question is this: what can anyone with debt, let alone those smashed by this loan changeover, do to cope?

If the CBA economics team is right, the time in this punishing repayment prison might only be to year’s end, with the first quarter being the time when rates could start falling again. But that’s guesswork. The higher repayments are certainty for many home loan borrowers, so what can people do to deal with a possible 60% jump in monthly repayments?

The drastic action is to list their home ASAP before others do, and while the supply of housing for sale is low and house prices are starting to rise again.

Away from such a heartbreaking option, a US woman thought outside the square converting virtually a small shed in her back garden into a comfortable one-room abode! She decided to live small to make ends meet with rising interest rates.

Thinking outside the square is often a great way to beat problems and even get richer. This lady built a tiny home at the back of her 1,400-square-foot house in Atlanta, Georgia for about $35,000, and then proceeded to get rent from her existing house.

Many locals could think about converting a garage into a place to live for a year or so until interest rates fall. The upshot might be that they could end up with an Airbnb place to earn income on when they resume living in their bigger place. In fact, the conversion could even give enough money to cope with the expected jump in home loan repayments because of the looming mortgage cliff.

In the old days, as interest rates rose, Aussies went looking for a second job. That’s what I did in the early 1980s when home loan rates went sky high! I was teaching and ended up pulling beers on Saturday night at the Paddo RSL and started a cleaning business, which included a pub and a factory that introduced the famous Fairlight computer music instrument! (This was conceived by Peter Vogel in his Rushcutters Bay factory in 1979 and was bought by the likes of Stevie Wonder and Led Zeppelin!)

Later, I started an economics coaching school that ultimately evolved into the business that won the contract with the Triple M network, when an economics/finance commentator was needed to work with the likes of the late great Doug Mulray and the famous Degeneration team that morphed into the Working Dog company. These guys later produced programs such as Frontline,Thank God You’re Here, The Hollowmen and lots more, including the movie The Castle. These guys were great examples of businesspeople who thought outside the square!

In the 1980s, people took in lodgers (as they were then called), who were people who rented a room, which helped make home loan repayments easier. Airbnb will be a big help for anyone who will feel the pinch when they’re forced on to higher variable home loan repayments.

Another option is to put your spending ‘life on the lawn’ and do a budget. You could then ‘tax’ your consumption by 10%. This will help get you through when your repayments surge.

One smart action many should already have explored is to find a good mortgage broker to see if they can get you onto a loan at a lower rate. One YBR brokers I was talking to recently said he contacted all his clients in 2020 and told them about NAB’s unbelievable 4-year fixed rate loan at 1.89%, which he said most of his clients hopped into.

Having a mortgage expert on your side is a wise action, considering how long many of us spend dealing with home loans across our working lives.

You could also talk to your actual lender and see if they think you’re a good future customer that they’d want to keep, so they might come up with a better home loan deal because they want to keep you.

And don’t rule out seeking some financial counselling. The Government website — moneysmart.gov.au — points those worried about their debts to financial counsellors, which you can access free of charge.

As the websites tells us: “Financial counsellors are skilled professionals who provide advice and support to people struggling with bills and debt. A financial counsellor can:

• assess your financial situation
• provide advice about what to do if you're struggling to pay bills and fines
• help you negotiate with government agencies, your landlord, utilities, telcos, and other creditors
• assist you if you're being harassed by debt collectors
• refer you to other services you might need, such as legal, accommodation, health and crisis services.

(You can call the National Debt Helpline on 1800 007 007 or go to https://ndh.org.au )

The bottom line is if you’re worried about the mortgage cliff, start doing planning now to avoid losing your property or putting you and your loved ones through economic misery. As the old business saying goes: “No one plans to fail but they fail to plan!”