Mortgage stress is simple. If you are paying over 30% of your income towards your mortgage, you are considered to be in mortgage stress. According to Digital Finance Analytics, 35% of Australian homeowners are in mortgage stress, rising to a record high. We’ve put together a list of the best things to do if you are in mortgage stress.
1. Contact your bank and request a mortgage repayment holiday
A mortgage repayment holiday is exactly what it sounds like – it’s a break from making mortgage payments. Your lender may let you temporarily suspend your mortgage repayments – generally for a period of two to six months – allowing you to reduce your monthly outgoings and give you some valuable financial breathing space. Usually, you will need to be up to date with repayments when you ask for a repayment holiday. If you have been in arrears in recent months, your lender may not approve your mortgage holiday.
2. See if you are eligible to access super early to cover your mortgage arrears
You can elect to use a lump sum from your superannuation to pay your mortgage arrears. However, there are certain eligibility criteria that you must meet in order to access your super to pay your mortgage:
• The lender or council is threatening to sell your home
• You cannot afford to pay the arrears without accessing your superannuation.
If you are applying to access your super to help pay your mortgage, you will need copies of any default notices and a letter from your lender confirming the potential actions that will be taken if you do not pay the arrears.
3. Consider debt consolidation.
Speak to a mortgage specialist to see if your debts can be consolidated and repayments reduced. By consolidating all of your debts into one new home loan, you can pay out your existing debts and have just one repayment to manage. In addition to assisting you with a new home loan, Positive Solutions Finance may also be able to negotiate with your creditors to reduce the amount you owe on your unsecured debts, reducing your overall debts and repayments.
4. Access debt help! Clear your unsecured debts through setting up a debt repayment plan.
Having multiple unsecured debts can cause stress and it can be difficult to keep up with your repayments. By setting up a debt repayment plan, you will be able to manage these debts more easily, and also stop any further interest accumulating. To set up a debt repayment plan, you can call your creditors, they will be able to organise this arrangement for you. If you feel that your debt has spiralled out of control, you may prefer to call Debt Rescue for debt help, who will be able to advise the best way to tackle your debts. This could be in the form of an informal payment arrangement, Debt Rescue can tailor a specific arrangement for you, called a Debtstroyer Agreement. In this instance, Debt Rescue will talk to the creditors, meaning you don’t have to. Accessing debt help early can help you avoid bankruptcy.
5. Sell your property and negotiate a waiver on the balance of any shortfall you may have.
Sometimes there is only one option when you are in severe mortgage stress, and that is to sell your house. If you have to sell for less than you owe, the shortfall can be reduced by negotiating a waiver on the amount. You should find out your options from your mortgage provider if you are selling a house with negative equity. Debt Rescue is able to negotiate this amount for you, should you decide to sell.
6. Mortgage stress does not have to mean losing your home. Protect your home if you become bankrupt.
Our partner company Revive Financial deal with many cases of people wanting to keep their home but also need to declare bankruptcy. Fortunately, they can help you too. Our Revive Financial bankruptcy trustee will assess your situation, and recommend the most appropriate course of action. For more information about declaring bankruptcy and keeping your house, check out this case study at Revive Financial.
Amid an epidemic of mortgage stress, a perfect financial storm is on the way. Like any patch of bad weather, it’s important to be prepared. If you are worried about your financial situation or losing your house, contact our friendly team at Debt Rescue today, on 1800 00 3328.