To avoid mortgage stress, borrowers need to limit their credit tap.

While the home-lending environment in Australia appears to be favourable to borrowers due to recent market developments, mortgage stress continues to badger many, with household debt-to-income ratio hitting 200%. What can borrowers do to avoid the mortgage trap?

One of the most effective ways to save on home loans is to refinance. Doing so in a low interest-rate environment is quite practical, said Lincoln Eastment, a mortgage broker with East Financial Services.

"Many banks will offer lower rates to new acquisitions than established customers. That's a good deal if you are a new customer but not if you have been with the bank for a while," he told The Daily Telegraph.

Also read: Why saving for a mortgage has become a struggle

He said that borrowers need to ensure that their current home-loan deals are as competitive as the ones being offered to new borrowers.

"Traditionally, people don't like to change banks, but that behaviour is changing. Why? Because it all comes down to brass tacks. What is the best financial deal for you? Speak to your bank. If they don't want to play ball, look elsewhere," he said.

Another way of preventing mortgage stress is limiting exposure to credit. Eastment said high-rate credit cards should be avoided. He also said that paying off existing credit cards is crucial to make sure that debts do not rack up quickly and do not incur extra interest.

"If you can pay off your credit card before the statement due day, make sure you do. Try to make it a non-negotiable," he said.

Also read: The impact of an extra $50 towards mortgage repayments

Borrowers who would like to be comfortable paying off their mortgages should consider turning off their credit tap. While limiting the credit source would mean giving up some unnecessary expenses, she said borrowers need to also reassess their lifestyles and how the changes could affect them in the longer term.

Australians who have a stronger grasp on their finances can consider another strategy called rentvesting to minimise the risks of falling into a mortgage-debt trap. Rentvesting is a homeownership strategy that involves purchasing an investment property and renting a primary residence.