We are concerned about reports of some businesses targeting home owners struggling to meet mortgage repayments with the promise of a quick sale at prices below market value. Before considering the sale of your home you should read over the tips below, which may help you to make informed choices about your mortgage and your home.
The tips set out on this page provide general guidance only and you should seek independent advice as soon as possible if you are experiencing financial difficulties. In-depth information on managing your money is available on the Australian Securities and Investments Commission’s consumer website FIDO. FIDO’s Managing your loans and your mortgage and Protecting wealth pages provide detailed advice on dealing with debt problems and ways to protect the equity in your home.
Seek advice from a financial counsellor, specialist community legal centre or legal aid office as soon as possible to discuss your options. These services can be free depending on your circumstances. Financial counsellors can help you decide what you can do including:
clarifying your legal position if you can’t pay your mortgage or other debts
identifying what debts you should pay first
preparing a budget to help you work out your current and future financial situation
exploring ways to reduce your expenses and increase your income
checking your eligibility for short term interest free mortgage relief loans that are offered by some state governments to cover temporary shortfalls
advising on the appropriateness of accessing some of your superannuation to avoid losing your home
advising whether consolidating your debts would be beneficial—this can extend your commitment and increase your interest payment
exploring ways to help you pay a little more off your loan when you can to give you a buffer in difficult periods
helping you to avoid taking out extra debt like credit cards and loans and to pay cash whenever you can.
Contact details for financial counsellors, community legal centres and legal aid offices are available on our Consumer and business directory.
Contact your lender
Talk to your lender as soon as you know you might miss a payment, they can help you to sort out what your options are. The following tips may be helpful when you are talking with your lender:
Be honest about your circumstances and what you can afford to repay.
You may be able to negotiate reduced repayments by extending the term of your loan.
Your lender may allow you to temporarily suspend your payments or make lower repayments for a period of time.
Your lender may be able to help you assess your current loan and consider whether you need to downgrade to a more basic option—don’t forget that you will probably have to pay a fee for changing loans.
If the lender refuses to consider a repayment arrangement, you might be eligible to apply for a hardship variation under the Consumer Credit Code.
a specialist consumer community legal centre, financial counsellor or legal aid office can provide you with more information on how to arrange this
if you are eligible for a hardship variation you can apply to a court or tribunal to order the lender to agree to a variation. Obtain advice before considering this option as there may be considerable costs involved.
If you have tried to negotiate with your lender and don’t feel that your request for assistance has been dealt with appropriately you can lodge a complaint with an ombudsman or independent dispute resolution scheme. Your lender may be a member of one of the following schemes;
the Banking and Financial Services Ombudsman
the Credit Ombudsman Service Limited,
the Credit Union Resolution Centre
the Financial Co-operative Dispute Resolution Scheme.
your lender can advise which scheme you should contact
Remember to keep making repayments that you can afford while you are trying to negotiate a repayment arrangement.
Before refinancing your loan consider the following:
Thoroughly check out the background of the broker or lender. If the broker and the lender are members of an external dispute resolution scheme (such as the Credit Ombudsman Service Ltd or Banking and Financial Services Ombudsman), it will be easier to resolve problems when they arise.
Be wary of high pressure sales tactics.
Be wary of suspicious conduct by the broker or lender, such as withholding documents, providing false information or rushing transactions.
Thoroughly check all fees and charges payable under an alternative loan—remember high fees and charges may wipe out any apparent savings from lower interest rates.
Check what fees apply to terminate your current loan—most home loans carry fees in excess of $1000 if they are terminated or paid out within a specified time frame.
If in doubt, don’t sign anything—seek advice about your options from a financial counsellor, community legal centre or legal aid office.
Selling your home
While it’s a hard thing to do, it may be best to consider selling your house.
Selling can mean that you walk away with more money to start again than if you delay.
If you do decide to sell your home, make sure you shop around to get the best deal.
Seek valuations from a number of agents before deciding on a reasonable selling price that will optimise your position.
More information on managing debt problems is available in our booklet Dealing with debt: your rights and responsibilities. You can download a free copy of this booklet from the 'Key publications' box above or call our Infocentre on 1300 302 502 if you would like to receive a hard copy. Produced in conjunction with the Australian Securities and Investments Commission, it is available in English, Arabic, Vietnamese, Chinese, Italian, Greek and Turkish.
