Do you Need Help with Your Mortgage Arrears?

Falling behind on your home loan payments is very stressful. As mortgage arrears can end with foreclosure and eviction. 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 lender and product availability. 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 to see that your financial problems are over; and 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 charged based on the original loan agreement. However, you would be charged an additional mortgage arrears rate of 3-5% on top of your regular interest rate. Therefore, it is essential to pay your arrears and 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?

How long have you got before an eviction? Importantly, the time to eviction can vary between lenders. However, if you are three months in arrears, call your lender to discuss your options. Importantly, take immediate action if you have experienced 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.

What do lenders look at if I refinance my home loan?

When you refinance your home loan, a lender will look at your payment history, credit history, income, along with other information.

How many payments you have missed is important. However,  equally important is why you missed your payments. As such, see below some additional information a lender will look at:

  • 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?
  • Also, will your overall payments increase or decrease?
  • 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, applying for hardship to assist with your arrears and your financial problems may be possible. However, there are many different mortgage hardship structures:

  1. 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.
  5. Finally, allowing for no payments until you sell your home.

It is essential to understand the hardship you are applying for; and also what is approved. Consequently, an incorrect hardship agreement could result in prolonging a property sale, or a home loan refinance.

  • 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 an insurance policy on your home loan? 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. 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 are contributing to a home loan arrears as can be read in the RBA report. As such, an arrears problem is most likely a result of reduced income. However, there is always a root cause for not making home loan payments with some reasons not immediately able to see.

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. As such, mortgage arrears caused by income problems related to an economic downturn and an increase in the unemployment rate. Also, the end of an employment contract, having a baby resulting in a loss of one income while being overcommitted. In all cases, there is an upset to financial stability.
  2. Secondly, decreased housing market and real estate values. As such, this could relate to an economic downturn resulting in no equity and inability to consolidate debt.
  3. Thirdly, health and 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.
  4. Divorce and family break up.
  5. Finally, mental health, gambling and substance abuse issues.

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

Benefits of Refinancing Mortgage Arrears and Solutions

  1. Meeting your regular monthly payment plus the arrears hardship payment may be difficult. Plus, payment difficulties can increase if you have high-interest debts such as credit cards. 
  2. Also, if a payment plan fails, recovery action will usually start again. 
  3. Finally, refinancing your home loan arrears will stop the lender eviction process. As a result, the new loan wipes the slate clean, so you have a fresh start.

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.