What To Do If You Have Mortgage In Arrears In Australia

Struggling to make mortgage payments can be a daunting and stressful experience for homeowners in Australia. Falling into mortgage arrears, where one or more payments are missed, can have serious consequences, including damaged credit ratings, increased interest rates, foreclosure, and even legal action.

However, it’s important to know that there are options available and resources to help homeowners navigate through these challenging circumstances.

In this article, we will explore what mortgage arrears are, the potential consequences of being in arrears, and the various options and organisations in Australia that can provide assistance and guidance to individuals facing mortgage arrears.

Whether you’re seeking advice on negotiating with lenders, exploring hardship variations, or finding alternative solutions, understanding the steps to take is crucial in finding a path toward financial stability.

What are mortgage arrears?

Mortgage arrears occur when a homeowner misses one or more mortgage payments. Falling behind on mortgage payments leads to being considered in arrears.

How many months of mortgage arrears before repossession?

The number of months of mortgage arrears before repossession can vary depending on the lender and the specific terms of the mortgage agreement. However, in general, most lenders will initiate the repossession process if a homeowner is more than 90 days in arrears with their mortgage payments.

What are the consequences of being in mortgage arrears?

Being in mortgage arrears can have serious consequences for homeowners. Some of the potential repercussions include:

  • Damage to your credit rating: When you miss mortgage payments, it negatively affects your credit score. This can make it difficult to obtain future loans or credit cards and may result in higher interest rates on future borrowing.
  • Increased interest rates: Some lenders may increase the interest rate on your mortgage if you fall into arrears. This can further strain your financial situation, making it harder to catch up on missed payments.
  • Foreclosure on your home: If you are unable to resolve the arrears and bring your mortgage payments up to date, your lender may proceed with foreclosure proceedings. Foreclosure can result in the loss of your home, as it allows the lender to sell the property to recover the outstanding mortgage balance.
  • Legal action: In severe cases of mortgage arrears, the lender may take legal action against you to recover the debt. This can lead to additional financial costs and potential court judgments.

If you are struggling to make your mortgage payments, it is crucial to take immediate action and seek help. Several organisations specialise in assisting homeowners to overcome mortgage arrears and find viable solutions.

What are my options if I'm in mortgage arrears?

If you find yourself in mortgage arrears, there are several options you can explore to address the situation:

  • Contact your lender: The first step is to contact your lender and explain your financial difficulties. In some cases, they may be willing to negotiate a temporary repayment plan or modify the terms of your mortgage to make it more manageable.
  • Apply for a mortgage hardship variation: Some lenders offer mortgage hardship variations, which are modifications to the loan terms designed to assist borrowers in difficult financial situations. This could involve temporarily reducing the monthly payment amount or extending the loan term.
  • Sell your home: If it becomes evident that you cannot sustain mortgage payments and other solutions are not feasible, selling your home might be an option. By selling the property, you can utilise the proceeds to pay off the mortgage arrears and potentially avoid foreclosure.
  • Seek professional help: Various organisations provide professional assistance to homeowners dealing with mortgage arrears. These organisations can offer financial advice, mediate with lenders on your behalf, or help you explore alternative housing options.

How to get help with mortgage arrears

If you are struggling with mortgage arrears, numerous organisations in Australia are available to provide guidance and support. These organisations specialise in assisting individuals facing financial difficulties related to their mortgages. Here are a few examples:

  • The National Debt Helpline: The National Debt Helpline offers free financial counselling and guidance to individuals facing mortgage arrears or other debt-related issues. They can help you understand your options and negotiate with lenders. Contact them at 1800 808 546.
  • The Financial Rights Legal Centre: The Financial Rights Legal Centre is a non-profit organisation that provides free legal advice and representation to individuals facing financial hardship, including mortgage arrears. They can help you understand your rights, negotiate with your lender, and provide legal assistance if necessary. You can reach them at 1300 787 287.
  • The Australian Financial Complaints Authority: The Australian Financial Complaints Authority (AFCA) is an independent organisation that handles complaints and disputes between consumers and financial institutions. If you’re experiencing issues with your lender regarding mortgage arrears, AFCA can provide mediation services and help resolve the situation. You can contact AFCA at 1800 931 678.
  • State-based financial counselling services: Each Australian state has its own financial counselling services that offer free and confidential advice to individuals struggling with debt, including mortgage arrears. These services have qualified financial counsellors who can assess your situation, provide budgeting advice, and assist in negotiations with your lender. You can search online for the specific financial counselling service in your state.

Remember, when seeking help with mortgage arrears, it’s important to gather all the necessary documentation related to your mortgage, income, and expenses. This will help the organisations and professionals better understand your situation and provide appropriate assistance.

Navigating Mortgage Arrears in Australia

When faced with mortgage arrears in Australia, it’s important to take proactive steps to address the situation and seek assistance from the appropriate organisations. By contacting your lender, exploring hardship variations, or seeking professional advice from financial counselling services, you can work towards resolving your mortgage arrears and finding a viable solution.

Remember, you are not alone in this journey, and there are dedicated resources available to guide you through the process.

If you’re looking for personalised guidance and support, consider speaking with our experienced mortgage brokers who can assess your situation, provide tailored advice, and help you explore refinancing options or negotiate with lenders. Take action today to regain control of your mortgage payments and secure a more stable financial future.

Contact our mortgage brokers today for a confidential consultation.

Get a free Australian mortgage assessment today.

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Frequently asked questions

If you consistently fail to make your mortgage payments and don’t take any action to address the arrears, your lender may start the repossession process. This involves taking legal action to repossess your home and sell it to recover the outstanding debt. It’s crucial to act promptly and seek assistance to avoid foreclosure.

The timeframe to get out of mortgage arrears varies depending on several factors, such as the extent of the arrears, your financial situation, and the actions taken. If you are able to negotiate a repayment plan or reach an agreement with your lender, it may take several months to catch up on missed payments and clear the arrears. It’s important to stay in communication with your lender and diligently follow any agreed-upon plan to resolve the arrears.

Getting a mortgage while in arrears can be challenging but not impossible. Lenders will typically consider your credit history, income stability, and the extent of the arrears when assessing your application.

If you are able to demonstrate that you have resolved the arrears and have a stable financial situation, some lenders may be willing to offer a mortgage. However, you may face higher interest rates and stricter lending criteria compared to borrowers with a clean payment history. It’s advisable to work on improving your financial situation and rebuilding your credit before applying for a new mortgage.

Remember, the information provided here is general in nature, and it’s important to seek personalised advice from financial professionals and organisations specialising in mortgage arrears to understand the options available to you based on your specific circumstances.

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