How To Avoid Home
Repossession
Undoubtedly you have read recent media reports that every week
hundreds of Australians are faced with losing their home as a result of
a spate of escalating interest rates. In Victoria alone, 50 households
each week receive repossession notices because they cannot pay their
mortgages. Statistics are no better in the other states of Australia.
If you are struggling to meet your mortgage repayments there are steps
you can take to prevent repossession of your home by your lender.
Prevention is always the best plan, but if you’re past the point of
prevention, the sooner you start to deal with the situation, the more
options you have at your disposal and the better off you’re likely to be
in the end. Following current mortgage lending and real estate market
industry trends can help you to form the right plan of action for your
individual circumstances.
Rather than running the risk of loosing your home, take action. Here are
a few tips to help you avoid repossession of your home:
- Before accepting a mortgage look over the mortgage documents. If
you are accepting a variable rate, consider what will happen if the
rate goes up. Ensure that firstly, you are able to afford the mortgage
with today’s rates. Secondly, you are able to afford the mortgage
should the rate move up by as much as 1%. If unsure – fix the rate for
at least 3 years, this will give you some breathing space as you can
be sure that no matter what else happens with interest rates you will
not need to pay more than you are paying today.
- Set a budget and stick to it. This is the only way to make sure
that you have enough money available to pay your mortgage.
- If you only need a $300,000 loan for example, but can qualify for
a $400,000 loan. It is best to accept the $400,000 but only use
$300,000. The other $100,000 can remain as an available buffer to you
in the event that things get unmanageable. By taking such an approach
you are guaranteed not to fall victim to rate increases. Even if the
rate goes up by 3% from today’s level (highly unlikely) - your
$100,000 will be enough to cover the extra 3% for many years.
- If your financial problems are temporary it is sometimes possible
to negotiate with your lender for a temporary payment reduction. If
that fails it may be possible to obtain some short-term finance to
help you cover a rough patch. It may also be possible to refinance
your home loan to a better rate. We have helped many Australian save
their home by taking them away from the high rate non-conforming
lenders where they were paying as much as 13% p.a. to a rate of only
9.5%. Imagine how much easier it is to afford your home loan with such
a saving.
- If the situation is one in which losing the house is imminent, and
the best you can hope for is to try to avoid home repossession on your
credit history, then selling your home by yourself may be the best
plan. While you do lose your home, you can at least try to recover as
much of your own money out of your property as is possible.
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