Many people, at some point in their lives, find it hard to repay their home loan. Luckily, there are steps you can take to make your own life easier during these difficult times.
Here is information that will help you understand what to do if you think you are going to default on your home loan.
A loan default occurs when a borrower does not pay their home loan repayment on schedule. Technically, a loan is considered to be in ‘default’ one day after a repayment is due. However, a lender will generally start following up on a late payment when it is approximately 7 days overdue.
During the US housing crisis (2007 to 2010), foreclosures increased and repossessions multiplied, which in turn, increased the amount of homes sold in a weak property market. This served as quite a shock to homeowners, who in some cases lost their homes to lenders who foreclosed on their loan.
In Australia, lenders typically follow this process:
What happens when the S88 Notice expires?
The solicitor issues a 6Q Notice, which gives the borrower 7 days to clear the loan balance in full. (Time is once again given for postage.)
After this point, time frames will depend on which state of Australia governs the lender and the borrower’s transaction.
If a loan is not paid after this point, it usually takes around 6 months for the lender to gain possession of a property via eviction. But this is certainly just an estimation, as each lender and state may have different time frames.
If you know that you’re unlikely to make an upcoming mortgage repayment, contact your lender as soon as possible. Tell them about your financial situation and seek advice about the best way forward.
We also recommend contacting a financial counsellor and getting support with improving your financial situation.
In response, your lender may be able to make repaying the loan easier by changing your borrowing arrangement. This is likely to happen in 3 ways:
For assistance with securing a home loan that matches your budget and financial goals, please contact a Capita mortgage broker.
Financial Advice Disclaimer: This information is general in nature. Mortgage brokers do not provide financial advice. Clients seeking financial advice will be referred to a qualified financial planner.