Paying your mortgage is not one of the favourite things to do with our money, but it is essential if you want to stay in your home. That’s why most of us have sorted out the budget and keep money aside ready to pay the bank. Unfortunately unexpected surprises can happen and sometimes cause financial difficulties, meaning that mortgage repayments may be missed.
What to do if you can’t meet your mortgage repayments
If for any reason you know that you are going to be unable to meet your upcoming mortgage repayments, get in contact with your lender immediately. Banks and other lending institutions like to be kept informed and are likely to work with you to find a way to help you over the tricky financial period. This is especially true if you have met all your obligations in the past.
Ignoring any past or future missed mortgage repayments by putting your head in the sand is a big mistake. By not acknowledging to the lender that you are having difficulties, they can assume that you are deliberately not fulfilling your contractual obligations. This can lead to your home, further down the track, becoming a mortgagee sale so the bank can recuperate its costs.
When talking to your lender about ways to help you through your financial unexpected surprise, you will discover that there are a couple of things they can offer to help you out. Restructuring your loan can reduce your regular repayments. This means that you can increase the length of years of your mortgage, which reduces your regular repayments. Unfortunately this method will increase the amount of interest you will pay.
More tips on paying your mortgage when having financial difficulties
You could also take a repayment holiday, which allows you to stop making any payments or make interest only payments for an agreed length of time. This strategy will allow you the time to get your personal finances in order, but will add to the length of time your mortgage will run for.
With recent property valuations in Auckland having risen significantly, it could also be a great time for you to check and see if you now have more than 20% equity in your property. Banks in particular offer lower interest rates and promotional offers for borrowers who have borrowed less than 80% of their purchase or valuation price.
So while being financially challenged is not great, there are ways you can work with your mortgage lender to ensure that you stay in your property even though it is hard to meet your repayments.