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Re-financing

It is not easy the next time around. In fact, you probably remember how difficult organising your home loan can be. We can make it simple. We will help you take a good look at your existing home loan arrangements and quickly help you work out whether it’s right for your new circumstances or whether there are other options you should explore.

Mortgage in arrears

Have you not made the required payments on your home loan? This includes missed repayments or late and overdue payments. People find themselves in this financial situation due to circumstances that are unexpected and certainly unplanned for such as illness, loss of employment, divorce etc. – Home loan arrears are a very serious business that could result in the bank re-possessing your house and selling it to recover their money. However minor arrears due to a one off event can be dealt with directly with your lender usually without the need to refinance. Long term problems on the other hand may require a complete financial overhaul.

Missed payment or late payment

If you have made several late payments or have missed payments on your mortgage then you may find it hard to apply for a loan through the major banks and lenders. This is because when see the arrears in your mortgage and do not want to approve a loan for a borrower who is incapable of paying the repayments of their loan on time.

Having a missed just one payment and not paying your repayment on time are two very different situations:

  • A missed payment is a payment that you completely missed and never made up.
  • A late payment is one that you did not pay on time but did eventually make up the repayment. Therefore you should always make sure that you pay your repayments on time and be completely aware of the monthly payment date especially if the repayments are by direct debit.

Your current arrears – lenders view

As mentioned before the major banks and other prime lenders will not approve your loan if they can see any arrears. They do not lend to people who have missed payments on their current home loan, in particular during the previous 6 to 12 months – they are very strict in this regard.

However there are specialist and non-conforming lenders who can help you. They assess your loan based on how long it took you to make up your missed payments and if you can handle your current commitments or if you are overcommitted. We can find you the best lender to get your loan approved!

How to refinance if you have arrears

If you want to refinance your current home loan, you need a specialist mortgage broker to find you a lender who can consider your situation, especially people that are close to having their home repossessed. However if you can’t make the repayments on your home then it is better to sell your home rather than refinance and just end up in the same situation again. You can speak to our specialist mortgage brokers who will guide you to the right direction.

The arrears rate / default interest rate

The lender will charge you a default or penalty interest rate if you are behind with your payments. This is normally charged on the amount that is overdue, however in some cases this will be charged on the entire loan amount. This is why it is extremely important that you make your repayments on time – you will avoid the risk of being charged any defaults on your loan.

When will your bank take action?

The banks take action when there have been constant arrears on your home loan.

  • High LVR over 80% – generally 2 missed payments
  • Low LVR under 80% – generally 3 or more missed payments. However for this situation the banks will tend to work with you rather than possess your home.

However some lenders tend to take action faster than others depending on their hardship policy. It is important to talk to your lender and work with them rather than hide and to look for an exit strategy such as selling your home or refinancing and consolidating your debts.

What action will your bank take?

Our financial institutions of today change their tune and welcoming smiles that we see on their faces, when the customer’s life circumstances changes for the worse. The banks will have no hesitation in taking action if the borrower is in breach of their contract, which is generally when they have a mortgage in arrears.

Apply to refinance your home loan in arrears

As you wait, the time will accumulate more bank fees, lawyer fees and real estate fees, eating into your equity that you have in your home. Most of the time a new home loan or debt consolidation can be approved with the right lender; you just need an expert to find that right lender!

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