Banks can be very friendly when things are going well, but they can turn on you quickly if you get behind in your repayments – if you get into mortgage arrears and cannot catch up within the banks timeframe then you could be headed to a mortgagee sale.
It can be a horrible and stressful time.
Why Don’t The Banks Help?
Many people believe that the bank will be there to help out when something goes wrong and you start to struggle with your mortgage repayments.
It’s what you hear, and even the banks say you should speak with them; however unfortunately experience tells us that they just want to get the mortgage out of arrears.
If that means pushing you to sell or forcing you to a mortgagee sale then that’s what they will do.
They may start off with a pleasant conversation, and even offer to assist by giving you some time to catch up on the mortgage arrears – but they will often force their unrealistic timeframes on you and therefore it’s really no help at all.
Banks should offer to help, and I often see people that just need a bit of help and yet the banks are not willing to understand or help at all.
Banks could often offer help if they wanted – they could offer to:
- Give a mortgage holiday (no repayments) for a short period of time
- Allow you to pay interest only (reduced payments) for a short period of time
- Consolidate the arrears into a loan so you can catch up over time
There is a lot they could do, but instead they often will:
- Charge penalty interest rates
- Not allow you to go onto a lower fixed rate while in arrears
- Force you to cacth up over an unrealistic timeframe
- And when you cannot afford what they are inflicting then they will start legal proceedings to force a mortgagee sale of your home
- Of course you will be charged the banks exceedingly expensive legal fees
- And do they really care how much they sell your home for?
If you have mortgage arrears and are headed to a mortgagee sale then do you really want to trust the bank to do the right thing?
You Think The Banks Won’t Be So Nasty…
Let me share a recent situation that I was presented with.
Recently I’ve been dealing with a lady that had cancer, was unable to work and of course over those months when she was unable to work the mortgage fell behind.
She was trying to communicate with the lender, but it felt like she was banging her head against a brick wall and that’s the last thing she needed in the state that she was in dealing with cancer.
She asked for some relief – a mortgage holiday or switching to interest only, and they said “NO” and instead started charging penalty interest.
She has now recovered and when she got back to work she started paying her repayments again, but was struggling to catch up on the mortgage arrears.
All up she missed just seven of the weekly repayments which added up to just under $5,000 BUT they then added another $6,412 in legal fees and another $3,450 to discharge the mortgage – and that’s without the the costs to sell the home.
When she contacted us she was really stressed and needed somebody to listen.
We managed to get her refinanced with a non-bank lender, but at pretty good terms and she managed to save the home for her family.
It was one of those situations where you just had to feel sorry for what the bank had put her through. It appeared to be totally genuine and the new lender totally related to the situation.
Who Can Help If You Are Headed To A Mortgagee Sale?
I’m a non-bank broker that specialises in sorting our situations like this.
I really believe there is a need to help people to get themselves back on their feet. Generally it’s after something has happened in their life that has caused them to fall into financial stress, and rather than make any judgement I will draw a line in the sand and look forward.
Of course there are some common themes or causes that I see such as a business failure, redundancy, major health issues are a common one, and marriage breakdowns. Obviously you could argue that some of these could be avoided, but often it’s easier said than done.
Whatever the case, you do not want to be losing your home when you can recover from these situations.
Plus however bad things might look to you, or however bad the bank have said your situation is you could benefit from having an expert to have a good look and see what options you have.
If you feel that you are headed to a mortgagee sale then you should give me a call.
