Mar 01, 2018  | Tags: property, mortgage, mortgage broker

Our Insights

Mortgage accounts for some 60% of all Australian household debt. It’s easy to fall behind when interest rates spike or you suffer some unexpected event such as the loss of work, illness or a financial downturn that puts you behind on your payments.

If you’re in arrears on your mortgage or are afraid of falling behind, what can you do?

1. Identify where things went wrong

Determine whether it was a one-time event that set you back or a lifestyle issue you need to correct. Talk with mortgage broker, who can work with you and your lender on a plan for getting back on top of payments. If you're honest, upfront, take responsibility and explain the plan for getting back on track, the more likely the lender will be understanding and help you out.

2. Set up a budget

This is likely the best and only way you can have any control over your circumstances. Whatever the reason for falling behind on mortgage payments, budgeting is the best way to prioritise your expenses and ensure you have enough to meet your obligations. 

3. Claim it on your insurance

If you have unemployment or accident insurance for an event that set you back financially, it may be able to cover missed mortgage payments.

4. Consider refinancing and debt consolidation

Proceed with caution when it comes to refinancing. This isn’t the ideal option for everyone, but your mortgage broker or financial adviser can let you know if it’s the right solution for you.

5. Ask to make lower payments

You can ask your lender to lower your payments to the minimum in line with lowered interest rates. This can free up more of your income to care for your family’s needs and other financial obligations. You can make higher payments later on to pay off your mortgage faster at a time when you have more disposable income.

6. Tap into your redraw facility

This one is worth asking about if you’ve paid more than the minimum payment on many occasions.

7. Aim to make mortgage payment on the day you’re paid

Schedule a direct deposit from your bank on pay day or just reschedule your payment date to early in the month. If you put it off to later in the month, you always run the risk of spending all your income and not having enough for your mortgage payment.

8. Downsize 

Consider selling an investment property, or moving into a cheaper property, to reduce your debts and even clear debts altogether. 

9. Tap into your super

If you qualify, this should be a last-resort and only something you do after consulting with an experienced financial adviser.

What to Avoid 

If you’re desperate to get back on top of your mortgage payments, then be careful to avoid these mistakes:

• Increasing your line of credit
• Refinancing hastily
• Taking on more debt
• Borrowing money from friends and family
• Ignore missed payments and hope your bank won’t notice

Doing any of the above things are sure ways of worsening your situation.

The most important thing you can do is be honest with yourself and your lender. Seek help early on before you get bogged down in missed payments and heavy fees. Give your lender a notice of your hardship and schedule a time to sit down and talk. Your lender will help you decide on a plan that will meet your needs and benefit everyone involved. Your mortgage broker can help you through this process.

Get Help 

Want to know more? Why not give Calder Finance Broking a call on 08 8373 3333 and let our lending specialists help put your mind at ease.

Written and Supplied by Cliff O’Connell of Calder Finance Broking, for more information please visit the Calder Finance website. Please note that Calder Finance Broking Pty Ltd is a Corporate Credit Representative of BLSSA Pty Ltd ABN 69 117 651 760 ACL 391237.