Nicole AveryWhen you’re approved for a home loan, your lender (like us) has determined that you can repay your loan comfortably based on the information you provided at the time of approval. Sometimes though, unexpected things happen… so how what do you do if you can’t meet your repayments?
We understand unexpected events happen, and sometimes, they can impact your ability to pay your mortgage. If your circumstances change, it’s helpful to advise your lender as soon as possible, as they’re likely to have support available to help you get back on top of your repayments.
Generally, if you’re temporarily unable to meet your repayments on a debt, such as a credit card, personal loan or home loan, this is often called financial hardship.
At Bluestone Home Loans, we do everything we can to support our borrowers through the good times and the tough times. Our Hardship Assistance program gives financial assistance for borrowers who need support in meeting their mortgage repayments.
What is a Financial Hardship or Hardship Assistance program?
These programs are designed to support a borrower with repayment relief during a time of financial hardship.
If you’re in a situation where you’re temporarily unable to meet your credit contract obligations, seeking Hardship Assistance may help you manage your finances and get back on track as quickly as possible.
Some Financial Hardship Assistance solutions available are:
- Reducing or deferring repayments for a period of time
- Changing the loan to Interest Only
- Varying your loan set up in other ways
It’s important to understand that any kind of hardship support intended to be temporary and does not waive the contracted repayment obligations. Each lender will have a different policy, so it is important to discuss your circumstances with them, understand the options available and decide on the best option to suit your personal needs.
Common scenarios that may impact your ability to repay and make you eligible for consideration for Hardship Assistance are:
Unexpected employment changes
Your hours are cut down, your role is made redundant or your employer restructures.
Impacts to personal businesses
Your business experiences a sudden loss of revenue, or is ordered to shut down (due to unforeseen circumstances like during the COVID pandemic).
Investment property complications
A tenant in your investment property isn’t meeting the rent, or has suddenly moved out and left you to find a replacement.
Natural disasters
Your financial attention has been diverted to personal impacts of an emergency such as a storm, flood, drought or bushfire.
Health issues
Medical bills or inability to has temporarily moved to the top of your priority list until a health concern is addressed.
Relationship changes
Your marriage or cohabiting relationship with a shared financial obligation has hit a rocky patch or is coming to an end.
Examples of Hardship or Financial Assistance solutions
Partial repayments
An agreement is made with the lender where you pay a more manageable portion of our monthly repayments. Your loan term won’t extend, so down the road when you’re back on your feet, your repayments will temporarily increase to compensate for the partial repayment period. This is a commonly selected option.
Home loan repayment holiday
Your payments are paused for a set period. Interest is still charged, and your repayments will be slightly higher after the unpause.
What happens if my situation is not temporary?
If your change in circumstance is likely to last for a prolonged period or it is determined that Hardship Support is not a suitable option, you may decide that your circumstances require you to sell the mortgaged property.
In this case, it is important to discuss your plans with your advisor or mortgage broker and check with your lender to fully understand any liabilities, fees or other considerations such as the current value of the home vs how much is owed on the property.
Get the help you need now
If you are in a situation that will impact your ability to repay your loan for an extended period of time you can seek free, confidential financial counselling support through the National Debt Helpline on 1800 007 007 or visit www.ndh.org.au
Experiencing financial hardship can be an emotionally taxing experience. With Bluestone Home Loans, we’ll help where we can, and we want to see you get back on your feet and thriving. If you think you might need to access our Hardship Assistance program, contact us here.
