What to Do If You’re Behind on Your Mortgage

Topics: Reading time: 4 minutes

Your mortgage is one of your basic necessities, but what happens if you fall behind on payments? Whether you suddenly lost your job or you’re just finding it hard to make ends meet, you’re not alone. You wouldn’t be the first or the last to struggle with your mortgage, and you have more options than you think.

The most important thing is that you’re willing to address it and start taking action – that’s usually the hardest part. Your lender wants to get paid, but they also want to keep you in your home. Eviction is expensive and complicated, and your mortgage lender would much rather work with you to get you back on track.

With this in mind, you’re in a position to take several steps to not only catch up on your mortgage payments but also create a stronger budget for the future. Read on to see what steps you can take to get your mortgage back on track.

Call Your Lender

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. Once you pick up the phone, 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. Whenever possible, call them before you miss the payment. Once the loan is in default you might have fewer options.

When you call, be honest with your situation. 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. They might be able to offer you one of the following:

  • Hardship variation – 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 RefinancingMortgage 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.
  • Delayed payments – If you plan to get caught up soon, they might be able to pause or delay your payments temporarily. Most lenders call this forbearance.

Talk to the Ombudsman

If you haven’t had any luck with your lender, you can also contact the Australian Financial Security Authority. They act as an impartial dispute resolution service to help you resolve your complaint with your mortgage lender. It’s important to remember that you don’t have to handle your lender on your own if you’re not getting the results you need.

Assess your Budget

If you keep missing mortgage payments, it might be time to reassess 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.

Housing is a necessity, so it’s worth tapping into your emergency fund if you’re struggling to make ends meet. Your emergency fund is exactly for this type of thing.

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. Many want to keep you with them, and they can offer discounts or lowered services that might suit your needs.

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 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. However, choosing a less expensive home or renting temporarily could save you in the long run.

Increase Your Income

While it might not be a fit for everyone, getting a side hustle or looking for small ways to earn more money can go a long way. These small steps could bring a few extra hundred dollars into your bank account each month, helping make ends meet on your mortgage payments.

If you’re falling behind temporarily, getting a second job, asking for more hours at work, or looking for side gigs could be a short-term solution. Like with any job, make sure you create a budget to take any new expenses into account.

A Word of Caution

If you’re behind on mortgage payments or struggling to pay on time, it’s easy to fall into a few different traps. Many people think it’s a good idea to use their credit card beyond their means. While this might be tempting, 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.

Another thing to avoid is carelessly pulling money out from your super. Taking 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. For more than 15 years, 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.

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Debt Busters is an Australian owned business which was founded in 2005 - since then we have been able to help thousands regain financial control.

Debt Busters prides itself on providing a dedicated Client Service Manager to work closer with you and provide a higher level of customised service about your situation.