In difficult economic times, it is sometimes hard to make sure that you are on top of all the debts you owe. One of the largest debts that most people have is their mortgage.
It is very important that the mortgage is paid regularly because if it is not, you might lose your home. The bank is allowed to repossess and sell your home if you do not pay your mortgage.
What can I do to stop the bank repossessing my home?
If you are struggling financially, there are several options available to you that might avoid the bank taking back your house.
In the first instance, you should always speak to the bank about your financial position, preferably as soon as you know that you might have trouble making the next payment rather than if you have already missed the payment.
The bank may agree to allow you not to pay your mortgage for a small period of time until your circumstances improve. The missed payments are “added” on to the mortgage and extend the size and often the duration of the mortgage, but it means that for a period of some months you do not need to immediately make payment. This is often called “capitalisation of interest” or a “hardship provision”.
Another option may be that you re-finance with another lender and on different terms. Whether that is possible, or whether the bank agrees to allow you additional time to make payment, depends entirely on your circumstances and whether the bank takes the view that in the future you will be able to meet your mortgage commitments or catch up the arrears.
You may also in some circumstances be able to apply for an early release of some of your superannuation savings for the purpose of paying your mortgage arrears, however doing so may have some tax implications for you.
If you are encountering financial difficulty, you should speak to your accountant or, if you do not have an accountant, seek specific financial advice from a person qualified to give such advice.
Whilst Andersons Solicitors cannot give you financial or accounting advice, we can negotiate with your bank with a view to giving you extra time in which to pay the mortgage or to refinance with another lender. The most important message is to act early. As soon as you are aware of your financial difficulties, take action.