Catching up on repayments - Mortgage stress
I’ve missed a repayment – what should I do?
- Keep paying as much as you can afford
- Pay as much as you can of your mortgage repayment on a regular basis. This is better than paying irregular lump sums.
- With regular repayments, the lender can see how much you can afford and that you will keep to a regular payment amount.
- For example, if your repayment is $1,000 a fortnight and you can only afford $700, then keep paying $700 every fortnight.
- Then pay more when you can.
- Contact your lender to change the terms of your loan.
Contact your lender to negotiate a repayment amount you can afford, by applying for a hardship variation. You have rights under credit law when you are in financial hardship to try to negotiate a change in repayments.
A financial counsellor may be able to help work out what you can realistically afford to repay and help you apply for a hardship variation.
Beware of the dangers of exploitative lenders!
If you are considering refinancing your home loan, be careful to avoid high cost lenders who might take advantage of your situation.
Things to look out for include:
- The loan is described as a business/investment loan and you are required to sign a declaration to state that the credit law does not apply.
- The mortgage broker charges a large fee.
- The loan is for a short term.
- The loan is for interest only for a term, but you cannot afford to repay principle and interest repayments once the interest only period ends.
- The interest rate is quoted 'per month' instead of 'per annum', or is otherwise particularly high.
- You do not have to make repayments for a set period, or for the period of the whole loan, but the whole loan amount is payable within a short time (less than 5 years).
- The repayments on the new loan will be higher than the repayments you are currently required to pay! = Do not refinance.