Do you Need Help with Your Mortgage Arrears?

Mortgage arrears can end with foreclosure and eviction. As a result, falling behind on your mortgage repayments is very stressful. However, there is financial help available to pay arrears and stop a potential eviction.

Can I refinance my mortgage?

It is possible to refinance your home loan; even when you have missed or stopped making payments. However, your situation will determine the chosen lender and product. As such, each lender has a different ability to provide finance based on:

  1. Late payments, specialist lenders may offer a loan up to 90% of your property value. However, if you are late only by a few days, you may still qualify with a traditional lender.
  2. Minor arrears, you could obtain a loan 80-85% of your property value.
  3. Severe arrears of two months behind on your payments could obtain a loan of 75% of your property value.
  4. Credit issues such as defaults or judgements can reduce your borrowing amount.

Above all, each lender will want your financial problems over; and see that you can meet your new repayments.

What default interest rate am I paying?

All lenders will charge you a default interest rate on your home loan. As such, the default interest rate is in the original loan contract. However, your interest rate would incur an additional mortgage arrears rate of 3-5% basis points on top of your regular interest rate.

Therefore, it is essential to make your payments on time. As a 4% interest rate could attract a 9% default interest rate.

How much time do you have before a mortgage eviction?

The question on the minds of our arrears clients is "how long do you have before an eviction?" Keep in mind; all lenders must follow a judicial foreclosure process. Although, the time to eviction can vary between lenders.

Importantly, if you are three months in arrears, call your lender or us to discuss your options. Indeed, take immediate action if you receive lender communications below:

  • Firstly, receive a demand to pay. 
  • Secondly, receive a default notice.
  • Importantly, a court order or court proceedings.
  • Above all, had the sheriff at your door and received an eviction notice for possession of your home.

We will represent you and find out how much time you have. Firstly, contact us as soon as possible on 1300 796 850 to discuss your mortgage arrears.

Will a lender approve my home loan refinance?

When you refinance your home loan, a lender will look at your payment history, credit history, income, along with other information. Therefore, the lenders seek to understand the issues, and also try to work out the risk on falling behind on their new loan. 

There are quite a few things the lender looks at including your payment history. Therefore, the number of missed payments is essential. However, equally important is why you missed your payments. As such, see below some additional information a lender will look at:

  • Firstly, repayment history and how many payments you have made in the last six months.
  • Secondly, the $$ amount of arrears although the number of payments is more important. 
  • Also, are you consolidating other debts?
  • Plus, will your overall payments increase or decrease?
  • Importantly, are there any increases in arrears? Otherwise, is your arrears a short term problem.
  • Finally, is there sufficient equity?

If I can't refinance can I get help with other mortgage arrears solutions?

There are several other solutions to consider when behind on your home loan repayments. However, not all may be suitable for you because of government or lender policies. As a result, see the list of alternative mortgage arrears solutions available to you below:

  • Mortgage Hardship

Each lender must allow for home loan hardship for all consumer loans. As a result, asking for hardship to assist with your arrears may be possible. However, there are many different mortgage hardship structures for your financial problems:

  1. Firstly, increasing your home loan payments.
  2. Secondly, stopping your mortgage payments altogether and making up your payments with a lump sum.
  3. Thirdly, stopping your payments for some time; then making higher than the standard repayments.
  4. Also, adding your arrears to the end of the loan term; meaning you don't have to pay the arrears today.
  5. Finally, allowing for no payments until you sell your home.

It is vital to understand the hardship you are asking for; and also what is approved. Consequently, a wrong hardship agreement could result in prolonging a property sale, or a home loan refinance. However, you may also apply for a hardship variation.

  • Payment Plans

Secondly, payment plans and hardship go hand in hand. As such, a hardship arrangement should allow you to pay your mortgage arrears over an extended time. However, the collection process can recommence if you miss a payment or falter on your hardship requirements.

  • Mortgage Payment Insurance

Have you got a mortgage payment insurance policy on your home loan? Mortgage payment insurance protects your home loan payments. As such, the insurer may pay your mortgage payment while you are having trouble. Although, mortgage payment insurance is not "lenders mortgage insurance (LMI)" which only protects the lender in the event of your default.

  • Ombudsman Complaint

Are you having trouble obtaining a payment plan? Otherwise, have you been rejected for hardship? As such, an AFCA complaint may help with your hardship request. However, once legal action has begun an ombudsman complaint (AFCA) cannot start.

  • Release of Superannuation

You may release your superannuation payments to bring your mortgage arrears up to date. However, this is only available for owner-occupied properties. Also, the release of superannuation must stop the lenders' eviction process and pay back the entire home lo arrears. As such, you need to have sufficient superannuation to allow full payment of your arrears; otherwise, the lender will continue foreclosure proceeding.

Arrears options summary:

You may qualify for a mortgage refinance, financial hardship or one of the other solutions. As such, financial counsellors can help when you have financial difficulties. Also, financial counsellors can help negotiate a repayment arrangement, hardship application, superannuation release and connection to other government services.

We highly recommend talking to a specialist mortgage advisor about your loan options. Hence, tighter lending standards means greater difficulty in obtaining approvals; even if you have a good credit rating. Call Loan Saver Network on 1300 796 850 to discuss your options. 

Let's talk about a solution that suits you

What are the major causes of mortgage arrears?

Many causes contribute to a home loan arrears; as can be read in the Reserve Bank of Australia (RBA) report. As such, an arrears problem is most likely a result of reduced income. However, there is always a further underlying cause for not making home loan payments. Although, some reasons are not immediately able to be seen.

Consequently, common instances are where there is a change in either debt level, such as a new car loan, or income such as having a baby.

Other common reasons for mortgage arrears leading to eviction are:

  1. Firstly, income issues related to reduced economic conditions and an increase in the unemployment rate.
  2. Also, the end of an employment contract can mean income stops.
  3. When you have a baby and lose an income; hence, there is an upset to financial stability.
  4. Thirdly, a decreased housing market and real estate values. As such, the mortgage arrears could relate to an economic downturn resulting in no equity and inability to consolidate debt.
  5. Then, medical reasons such as cancer, death of a family member, sickness of a child or income earner. Also, a partners health issue could result in one income loss, whereas a child's health issues can result in the loss of both incomes.
  6. Also, divorce and family break up can cause a devastating impact on financial stability.
  7. Finally, mental health, gambling and substance abuse issues that reduce the capacity to maintain mortgage payments. 

There is a range of finance and hardship solutions available to assist when behind on your home loan payments.

Benefits of Refinancing Mortgage Arrears

  1. Meeting your regular monthly payment plus the arrears hardship payment may be difficult. Plus, payment difficulties can be worse if you have other high-interest debts such as credit cards. 
  2. Keep in mind, refinancing your home loan arrears will stop the lender eviction process. Hence, the new loan would wipe the slate clean, giving you a new lender and a fresh start.
  3. Finally, if a payment plan fails, recovery action will usually start again. 

Loan Features available:

The available financial institutions have many loan features similar to traditional home loan features. Consequently, some of the loan features are:

  • Initially, offset facilities where surplus funds in a bank account can offset your interest.
  • Also, you may choose fixed or variable rates; or a combination of both.
  • Plus principal and interest payments, or interest-only mortgage repayments.
  • Finally, redraw and additional payments.

If you are seeking to rectify your mortgage arrears issues, we may assist in a tailored finance solution. Therefore, for mortgage debt help and other debt solutions contact Loan Saver Network on 1300 796 850 for confidential advice on your home loan arrears.