Concerned about not being able to pay your mortgage is obviously stressful and overwhelming, but there is some help available.
If you’re worried about missing a mortgage repayment, the most important thing to do is act early.
Talk to your Lender before you miss a payment, review your budget with a financial adviser, and consider short-term solutions to help you stay on track until your finances improve.
Talk to your lender early
If you’re concerned about missing a repayment or facing a sudden change in personal circumstances, it’s important to contact your Lender right away.
Lenders are often more flexible than you might think and may be able to offer temporary options like reduced payments, or a repayment holiday.
In some cases, such as in financial hardship, the Lender may offer a repayment plan or help you refinance to more affordable terms. Acting early shows you’re taking responsibility and that can make a difference to keeping your home loan on track.
While short-term measures can help ease your immediate financial pressure, once your financial situation improves, it’s a good idea to revert to your original repayment schedule, to catch up on your loan repayments.
Reassess your budget
Reviewing your budget is another important step for getting back on track financially. Take a fresh look at your income and expenses to see where you can make some changes. Even small adjustments, like cutting back on non-essential spending or pausing subscriptions, can help free-up cash for your mortgage.
Work with a financial adviser who can help you by preparing a realistic budget and plan for the months ahead. Have a mortgage adviser review your current mortgage structure to see if there’s a better way to spread your mortgage across fixed and floating interest rates.
Splitting your home loan across fixed and floating interest rates means you get best of both options: Flexibility to make lump sum payments, with no prepayment costs on the floating part of your loan, and certainty that repayments won’t change for your loan term on the fixed part of your loan.
Explore short-term solutions
If money is tight, there are some ways to ease the pressure while you get back on your feet again. One of these options which may be appropriate is applying to withdraw some of your KiwiSaver savings early due to significant financial hardship.
While KiwiSaver is designed to help you in the long term, such as when buying your first home or preparing for retirement, if you’re struggling to cover essential costs, you may be able to access some of the money you’ve contributed.
To apply for a financial hardship withdrawal, you’ll need to show evidence of your current financial situation, explain why you’re unable to meet your basic living expenses, and provide recent bank statements and supporting documentation.
Finally, if you’ve exhausted all other options and you’re still unable to keep up with your mortgage repayments, you may need to consider selling your home before the Lender starts the mortgagee sale process.
By selling the property on your own terms, you have more control over the process, can settle your debts, and then find a more affordable home.
What NOT to do
• Don’t ignore the problem. The longer you wait, the fewer options you’ll have.
• Don’t borrow high-interest credit. Short-term loans or credit cards can make things worse in the long run.
• Don’t miss payments without contacting your lender. Lenders are often willing to help if they know your situation early.
• Don’t cancel essential insurance policies. Life, income protection, or home insurance can be critical if your situation worsens.
• Don’t drain your retirement savings. Accessing your KiwiSaver should be a last resort.
• Don’t make unrealistic repayment promises. Be honest about what you can afford as overcommitting could set you back further.
• Don’t ignore professional help. Financial advisers, budgeting services, and mortgage advisers can help you find better solutions.
• Don’t sell your home in a panic. Selling too quickly could mean accepting a lower price than necessary. Explore other options first.
For more help getting back control of your finances, with a finance solution that protects both your home and your future, please feel free to reach out to us so we can help to find the best solution for your situation.
Simply pick up the phone and call 0800 LENDER (536337) or emailto help@ilender.co.nz We will be delighted to be your Mortgage Adviser of choice.