So, you’ve fallen behind on your mortgage – now what?
If you’ve fallen behind on your payments don’t worry, you wouldn’t be the first, and you certainly won’t be the last. Whether it’s due to job loss, a medical emergency or perhaps a change in your marital status, there are always options. The most important thing is that you’re willing to address it and start taking action – that’s usually the hardest part!
Read on to see what steps you can take to get your mortgage back on track.
Face your fears
Making the first call is probably the hardest part, but remember you’re not the only person to fall behind on their mortgage. Life happens and you don’t always have control over your circumstances, so it’s important to cut yourself a break. The good thing is that you’re addressing it now, and hopefully you’ve caught it before it turns into a bigger issue.
Talk to your lender
Now that you’re ready to face your fears, go ahead and make that call! You may be surprised what your mortgage lender can do for you.
Remember, it’s to their advantage to get you back on track, so they should have several options to help you out.
Let them know why you’ve gotten off track and how you plan to catch up so they can get a better picture of where you’re coming from. Make sure to ask them about your hardship variation and mortgage refinancing options:
Your lender may be able to change the terms of your loan with what’s called a hardship variation. It’s designed to address short-term problems and can temporarily reduce or delay your mortgage repayments.
Mortgage refinancing may help you save money on your repayments in addition to potentially protecting your credit rating. It will consolidate your debts into one regular payment and might be a good option if you’re struggling to repay other debts as well.
Talk to the ombudsman
If you haven’t had any luck with your lender, you can also contact the Financial Ombudsman Service at 1800 367 287 or the Credit & Investments Ombudsman at 1800 138 422. (Your lender will be able to tell you which of these two major schemes they’re apart of). These services act as an impartial dispute resolution service to help you resolve your complaint with your mortgage lender.
Assess your budget
If you keep missing mortgage payments, it might be time to re-asses your budget. Is there anything you can cut back on in the short-term to catch up on your payments? Or perhaps you can free up some money from a savings account? Make sure that if you decide to take any money out of savings that you put together a plan for replacing it little by little.
Renegotiate your utility bills
Your water, phone, gas and electricity bills may be making it harder to turn those mortgage repayments in on time. Talk to your utility providers to see if you can negotiate a repayment arrangement that works for you. If you receive Centrelink payments, you can arrange for a set regular amount to be paid directly towards your energy bills. You might also be available for government assistance and rebates – check out the Money Smart website for the relevant links based on your state.
Downsize your home or consider renting
While selling your home may seem like your last option, sometimes it’s the best option. If you know that you won’t be able to make your mortgage repayments anytime soon or stick to a reduced payment plan, purchasing a cheaper home or deciding to rent may alleviate some of the financial pressure you’ve been feeling. This is a big decision, so it’s important to seek professional financial advice and discover all of your options before going down this road.
What to avoid
Borrowing more money or using over-using your credit card
While it’s tempting to borrow more money or use your credit card to get caught up on your mortgage repayments, this will only put you further into debt. Make sure you assess all of your other options and remember that there are multiple ways to address this issue.
Pulling money out of super
Pulling money out of your super early can have serious consequences. You’re taking away from your future nest egg and you may be penalised for early withdrawal. Make sure to investigate all of your options before you decide what’s right for you.
If you’ve fallen behind on your mortgage repayments and you’re feeling overwhelmed, give one of our friendly consultants a call. We’ve helped thousands of Australians find their way out of debt and we can help you too. Call 1300 368 322 now to take the first step.