What can you do if you fall behind on your home loan?

Are you missing home loan payments? Has your mortgage become too expensive? What do you do when you miss home loan payments? This are questions asked by many homeowners facing financial difficulty and finding it expensive to meet their mortgage. This article explores some things that can be done if you fall behind on your home loan. While not an all-encompassing guide, it provides excellent, practical and proven ideas.

Credit: www.mortgagerescue.co.nz

 

People wonder what happens when you miss mortgage payments. Here are some of the things that may happen.

1. Your credit rating could be negatively impacted. This may make it harder to get loans, credit cards, finance, or other accounts in the future such as power or broadband/internet.
2. The lender may contact you and discuss a repayment programme.
3. The lender could issue a letter of demand, demanding you to make payment. They may demand payment by a specific date.
4. A Property Law Act notice (“PLA notice”) could be issued.
5. The lender may commence foreclosure and the mortgagee sale process and sell your home. This can help them recover the loan amount, interest and other costs.
6. You may incur other costs and consequences. Other recovery action could be taken, for example if there’s still an outstanding amount after selling your home.

The Citizens Advice Bureau has a helpful website explaining more about mortgage repayments not being met.

The issue of homeowners falling behind on mortgage repayments has been a serious concern. A recent report on RNZ indicated that the number of households behind on their mortgage repayments was up 26% (in 2023) on the same time last year in 2022.

Home loan challenges exist for many New Zealanders. There are other consequences that do not necessarily all appear in this article. Below are ideas for homeowners.

Discussing the situation with the lender

The sooner you take action, it may make it easier to solve your mortgage problems. Different sources suggest it is crucial to get in touch with the lender as soon as you realise you are having trouble (or will soon be having trouble) repaying your mortgage. Sources such as CAB suggest that long as you contact them as soon as possible, often lenders are willing to negotiate a payment plan to help you get through a challenging time.
CAB’s website also cites that someone may be able to use their KiwiSaver funds. Or discuss with the mortgage provider a hardship provision.

Make a budget

Making a budget and getting clarity on your finances may help you in some way with money problems and problems keeping up with repayments. You might notice that you’re spending too much on things that could be cut back, such as subscription TV like Netflix. Or expensive gym memberships. You may be able to redirect funds to areas more relevant like your home loan and meeting essential payments.

For help making a budget you could consider Sorted.org.nz ‘s budgeting tool or speaking to MoneyTalks (a free financial helpline service) who could put you in touch with a local financial capability mentor.

Restructure your mortgage and loans

Avenues can exist to restructure your mortgage and other loans to help make their repayments more manageable. Examples of this include debt consolidation or extending the loan term of the home loan.

Debt consolidation

Debt consolidation is the act of combining several loans or repayment arrangements into one is known as debt consolidation. It is a financial tactic intended to make managing debt simple and may result in a lower interest rate than otherwise. Individuals or companies can combine numerous high-interest loans, credit card balances, or other outstanding debts into a single, manageable monthly payment by consolidating their debts. This might result in lower interest rates, a longer repayment period.

Loan term extension

One potential way to make the cost of a mortgage more immediately manageable is to extend the term of the loan. The length of the loan allows for significantly lower monthly payments, which lessens the financial burden on homeowners. Smaller, easier to manage payments made over a longer period of time may increase cash flow and give budgeting more flexibility. Even though the total amount of interest paid over the longer term might likely be higher, the immediate advantages of better affordability and greater financial stability may outweigh this trade-off. Every situation is with its own nuances and consider discussing it with a suitably qualified financial professional.

Consider additional income

You may want to consider if you can increase your income. This might come from working another job, looking into government benefits or assistance, having a boarder or flatmate for a spare room, working overtime or other methods.

Work a second job

For instance, working a second job can be a practical way to earn extra money and contribute to the repayment of a mortgage. People can increase their monthly income by taking on additional. A person may want to also think about how it may affect their taxes, benefits, and possible personal relationships. However, a second job may provide a useful way to increase income and help the repayment of a mortgage.

Bring in a flatmate or boarder

When facing financial difficulties and finding it difficult to make mortgage payments, having a flatmate or boarder can be a helpful solution. The additional income can give a much-needed boost to pay the mortgage costs by renting out a spare room or splitting living expenses.

Refinancing with a non-bank lender

Non-bank lenders can have advantages over bank style lenders when it comes to refinancing. They may offer greater accessibility, easier criteria, flexible loan terms, specialised solutions, and interesting loan solutions.

They can make refinancing options available to a wider range of borrowers by lowering the eligibility requirements. Non-bank lenders also provide different loan terms to satisfy particular borrower needs. Their expertise in niche areas allows for specialised refinancing solutions.

You may find that a bank may not be able to restructure your home loan, however a non-bank lender could.

We explain non-bank lenders in New Zealand in more detail on our website. They can help you find alternative solutions for your mortgage. Contact us to discuss potential options with a non-bank lender.

Dealing with future mortgage arrears

While the future can bring unexpected circumstances or changes, there are some steps that you can take to help reduce the likelihood of falling into mortgage arrears in the future. Examples can include the following

Regular budgeting and working with a financial capability mentor. As different changes happen in your life, such as job changes, having a new born, a family member becoming sick, or something else happening. Regular budget management can help you to gain greater visibility on finances.

You may also want to consider what can be done to raise income over a period of time. Your income might be okay now but could be problematic in a few years, say if the cost of living were to rise. You could consider opportunities such as seeking out a promotion or upskilling to get paid more.

Good management of expenses also helps. You could figure what steps you take to ensure your expenses focus on necessities rather than excessive discretionary spending. Are you able to cut back on expensive meals and entertainment and put such money in a savings fund for a rainy day?

You may also want to consider long term plans. For example, right now you may be fit and able to work a 50-60 hour week which is how you keep your mortgage afloat. In the future, you may not be able to work as much, and therefore maybe consider a more affordable property, downsizing and selling up.

Consider getting legal help

You may want to consider getting the help of a suitably qualified legal professional to see if they can help. They may be able to help in different ways. Examples include but are not limited to, them being able to guide on you on the legalities of the situation, your rights, obligations, and potentially work in to find a solution from a legal point of view. It’s also possible a legal professional may be able to help if they identify an issue.

Reach out for help

For help with refinancing and to understand your options, you can contact us at Mortgage Rescue to understand your options. Reach us on our contact page or call 021 158 3156 for friendly help.

Can’t pay mortgage – What are the options?

Is your mortgage in arrears? Are you falling behind on repayments? Learn options for dealing with home loan problems or not being able to make your mortgage repayments in New Zealand.

Reasons why someone may fall behind on their mortgage repayments or have mortgage difficulties

Reasons for falling behind on mortgage repayments and experience mortgage difficulty
Credit: www.mortgagerescue.co.nz

Are you unable to afford your mortgage?

Did you have some change in circumstance compared to when you first got your home loan? Here are reasons why you may not be able to pay your mortgage:

  • Loss of a job or employment
  • Taken time off work, e.g. due to sickness, illness, injury, COVID-19, personal reasons
  • Being made redundant
  • Interest rates have increased – meaning your home loan repayments are too expensive
  • Increase in family size, such as having kids, which may have made your living situation more expensive
  • Financial problems, business problems, or other financial difficulties

New Zealanders have faced huge pressures with the rise of interest rates in previous times. They have seen their home loans become more expensive.

 

Consider talking to your bank or lender

A phone call or email to your bank can be a starting point. Your bank or lender may have options. These options can include ways for them to find ways to help you with not being able to pay your mortgage.

Here are ways the bank or lender may help:

Interest only

Sometimes, the bank or lender may agree to change your home loan to ‘interest only’ temporarily. This means a lower repayment, because instead of paying the full repayment which comprises of both principal and interest, you are just paying the interest only component.

Usually, this is a temporary measure and can provide you relief from expensive home loan payments.

Extending the loan term

The bank or lender may agree to extend your loan term and restructure your home loan. For example, if you currently have 20 years to repay your home loan remaining, they may offer to extend this to 25-30 years. This would lower your repayments. However you may want to keep in mind this means a potentially greater interest cost long term.

Keep good records

It’s helpful to keep good records of the emails exchanged with your bank or lender. This can help you in the event of dispute resolution, getting further help, understanding your obligations, what was agreed upon, and more.

Find a non-bank mortgage broker in New Zealand

If the bank can’t sort your situation, you consider a reputable non-bank lender being used. Rather than the major banks, New Zealand has many genuine smaller or alternative lending outfits, that can help people who have had past credit issues or other types of challenges.

Here at Mortgage Rescue, we provide mortgage broker services for non bank loans. It can be worth calling or emailing us right now to discuss the situation. We are based in New Zealand and can help Kiwis with their mortgage issues.

Don’t delay – call us sooner rather than later.

Sell the home or property

Although it might seem daunting, you may need to consider the option of selling your home as a way of resolving the situation. Your situation may just be unaffordable, and other methods of resolving the matter may not be suitable It may mean talking to a real estate agent, finding out the potential value of your home, and listing the property for sale.

Selling your home isn’t as bad as it may seem. Why? Because it’s possible your circumstances may have changed from the time you had bought the house.

Here are some reasons why selling could be an appealing prospect:

• You bought the house when you had young kids, and they have now grown up, moved out, or could move out. A smaller place could be more suitable, and cheaper for you.
• The house is too far from your workplace, hobbies, family, friends, anyways, and you could find something cheaper and smaller, but much more convenient, and also reduce financial pressure.
• The home is expensive to maintain or deteriorating in condition. You could potentially buy another property that is nicer and more modern, and doesn’t require so much in terms of maintenance or renovations.

Speak to a budgeting service

A budgeting service which has financial mentors may be able to talk to you about your finances. It’s possible that you are not managing your money as well as you could be. A few tweaks to how you manage that money could mean a difference in taking care of your finances. They may be able to guide you on where you could cut spending, or reduce debt levels, such as selling off a car, as ways of getting access to money or lowering your expenses. Reducing expenses and taking a good hard look at your budget may be one way of dealing with this.

You could speak to MoneyTalks for help to find a budgeting service in your area. You could also look up the budgeting tool available on Sorted.

Other ways of sorting if you cannot pay your mortgage options

This article gives a few general overviews, however every situation is different, and this article doesn’t necessarily cover all ways of sorting the situation if you cannot pay your mortgage.

You may also want to consider getting legal advice, and other options for help. You could consider seeking out help from a suitably qualified and experienced legal professional.

Get help if you cannot afford your home loan

If you are wanting to discuss options, call us now on 021 158 3156 or message us on our contact page. Or, use the “Apply Now” function to start figuring out if we may be able to find a way to help.

Generally speaking it’s worth making contact ASAP to get help. If you delay the matter, you run the risk of making the situation worse, damaging your credit rating, and possibly paying penalties, extra interest costs, and facing legal costs.

If a bank turned you down, is it worth going somewhere else?

Have you been through the experience of applying for a home loan with a bank, only to be declined or turned away? 

Or did the bank you were already working with, tell you that they can no longer help you?

This can be a devastating and stressful experience for many people looking for a home loan and to buy a house.

So is it worth going somewhere else? What do you do if you were declined for a home loan?

Yes!

Think about it like this. When you go clothes shopping, if the first store you visit does not have the right size or colour for you, does that mean that no other store will? Of course not! So just like that, there are different banks and lenders that can potentially accommodate you. 

Although the banks have to comply with various pieces of regulation and rules, each and every bank has some different criteria and policies that they set themselves. This means that certain banks can be more accomodating where others might not be able to.

In order to try to buy a property, you will want to consider working with a professional mortgage broker who can assist you in applying to a different bank. 

Also, certain banks may approve you for more or less than others. So if you’re wanting to increase your budget for a home loan, it’s worth talking to a mortgage adviser if another bank can lend you more.

 

Mortgage Stress is Looming; Can You Handle It?

The last review of the OCR by the Reserve Bank saw the regulator drop the rate by 0.5 points. Subsequently, lenders revised rates downwards to reflect the RB move. One can say that “Kiwis are laughing all the way to the bank”. Borrowers are enjoying better loan terms and bigger loans. This is reflected in the borrowing trends, especially of home loans. The average loan values have been rising and riskier (low deposit) mortgages  more common. On the other hand, credit card debt has ballooned.

With a higher debt to income ratio, New Zealand homeowners are at a higher risk of mortgage stress than ever before.

If you are already stretched to the limit with mortgage payments, mortgage stress could be looming. But are you prepared for it?

Read on and learn how you can handle it.

 

Build a savings reserve

Building a savings reserve may sound ironic right now but that’s exactly what you ought to do.

 

It’s time you took advice from one of the most successful investors in history – Warren Buffet. Spend what you have after saving.

You may have to be more realistic and check your spending.

Are you spending on what you need? Or are you trying to keep up with the Kardashians?

Reach out to a financial advisor or debt counselor and work out ways to cut your expenditure so that you can save. The more you have in your savings, the higher your chances of surviving a rate hike without being scathed.

 

Change the Mortgage Structure

If you are already experiencing mortgage stress, and your budget is stretched to the limit, you may need to review the mortgage structure.

Perhaps you had the ambition to finish paying off your mortgage in less than 15 years. So you took up a shorter-term mortgage. Or maybe your income has dipped, perhaps due to the loss of a partner through death or divorce, or due to a job shift.

Whatever the case, a review of the mortgage structure and terms can go a long way in relieving mortgage stress.

You can talk to the lender and discuss your options before you miss any payments.

 

In your discussions, consider stretching the loan term and reducing the installment payments. You’ll pay more interest in the long run, however, your credit integrity will be intact. This is what will help you live to fight another day.

 

Reach out to a bad credit mortgage broker

For many people, mortgage stress is often accompanied by denial.

When you fail to appreciate that you are unable to make mortgage payments and bury your head, you become vulnerable to a mortgagee sale.

 

If you’ve missed a few mortgage payments, it’s undeniable that you are experiencing mortgage stress. Unfortunately, the lender bank may not be as considerate as you expect and they may serve you with a PLA Notice. If that’s your case, reach out to a bad credit mortgage broker and explore your options of refinancing with alternative lenders.

 

It may seem like a more expensive option at first. But, it gives you room to breathe.

You can sell the home and downgrade to a more affordable home, or you can get much-needed time to get back on your financial feet.

 

Don’t let mortgage stress push you to a mortgagee sale. Reach out to a lawyer or a trusted mortgage broker and have them help you through these options.

Tips to Help You Buy Time When Facing a Mortgagee Sale

When you use a mortgage to buy a home, the lender retains charge over the title until after you have paid off the entire loan according to the contract. If you fail to make payments, the lender has the right to repossess and sell to recover the debt. When a lender takes debt recovery steps, it is could end in a mortgagee sale.

But the lender must do it according to the law.

Although the process of a mortgagee sale may not be quick, a couple of weeks or months could feel like a few moments, especially when you are trying to save your home.

Fortunately, you are not helpless. You can buy time and avert a mortgagee sale.

Here are a few tips to help you.

 

Reach out to the lender

Don’t bury your head in the sand or assume that the lender will not do anything.

It might not be the easiest thing in the book, but you can face your adversary straight. It may feel embarrassing and you may not want to go through all that, but as Mark Twain puts it, eat the frog first. The other tips will feel a lot easier.

When you reach out to the lender, be ready to explain your situation and propose a repayment plan. The lender can accept or reject your proposal, or they can counter it.

It’s advisable to have an experienced mortgage broker by your side to help in the negotiation.

 

Pay the outstanding amount

The lender will demand full payment of all outstanding amounts. If you have already received a letter of demand or a PLA Notice, you will see this request appear conspicuously on the letter or notification.

Unless the lender has decided to recover the entire loan secured by the mortgage (after non-payment and expiry of a PLA Notice), they are most interested in receiving payment of only what’s outstanding. This could be a couple of missed installments, interests and penalties.

If you have a means of paying off the outstanding amount immediately, do so. You could sell off an asset, like a car, or stocks you hold and use the cash to repay the outstanding amount on the mortgage.

This will buy you much-needed time as you’ll have reset the clock back to zero and the debt recovery process back to start.

 

Talk to a suitably qualified lawyer with the right kind of experience

Mortgagee sales are often intertwined with legalities. It is always advisable to seek the help of a suitably qualified legal advisor like a lawyer to help protect your interests.

But some lawyers specialize in home rescue and they can do more than just advise you. You can have such a lawyer negotiate on your behalf and represent your interests.

Armed with legal expertise and experience in mortgagee sales, such a lawyer can negotiate, on your behalf, in ways that you couldn’t. They may be able to secure for you more time to sell the home without a mortgagee sale tag, get an alternative lender, or secure a more stable source of income.

 

Explore government assistance or insurance

Could it be that you are facing a mortgagee sale because you lost your source of income due to an accident, or an unforeseeable illness?

If that’s the case, you can reach out to the Accident Compensation Corporation, a Crown Entity that gives up to 80% income compensation if you are out of work due to injury.

Alternatively, check with your insurer if your policy includes some sort of loss-of-income cover. If it does, this could be a great boost to your mortgage payment efforts and an excellent bargaining chip for more time.

But you’ll need assistance from an experienced mortgage broker throughout the process.

 

Reach out to a Specialized Mortgage Broker

There are mortgage brokers who specialize in mortgage rescue and averting mortgagee sales. These brokers have a wider net of lenders whom they work with and can advise you on where to get emergency refinancing solutions, even with bad credit.

A bad credit mortgage broker can guide you through the above steps and also negotiate on your behalf with the lender. They can buy you more time to get the right solution and avert a mortgagee sale.

Can you refinance your home loan with bad credit?

Bad Credit Home Loan

The official cash rate in NZ has been on a steady decline over the last 5 years. The latest cut drove it to 1% and triggered a ripple effect to lenders who in turn cut loan interest rates. Homeowners have been enjoying this steady decline. Many have opted to refinance and shift to differently structured mortgages or cheaper loans. The end goal is to make savings on your home loan payments.

Refinancing home loans may be an easy move if your credit score is in the green. But what if your credit score sank and it’s not the same as when you took the mortgage? What if you are in the red? Can you refinance your home loan with bad credit?

Read on and find out what are your options

 

What is “bad credit” and What are the odds of refinancing a home loan with bad credit. 

Like many other markets across the globe, lenders in New Zealand are increasingly relying on credit scores as an important criterion for approving loans. However, it is not the only criterion. A credit score is a statistical approximation of the likelihood of payment of a loan based on a historical assessment of how you’ve managed your financial affairs.

 

A good credit score (often above 700 out of a possible 1000) implies that the borrower is a good financial manager who is more likely to repay a loan. The opposite applies to a low score (below 500). Most conventional lenders peg the home loan credit score at above 500 A lower score would trigger risk mitigation measures by the lender such as a higher interest rate or tougher requirements like mortgage protection insurance or both.

 

When your credit score is not so good, you’ll have a harder time refinancing the mortgage. Your goal is to convince the lender of your trustworthiness without using the credit score. This may be hard. But there are options which you can explore like alternative lenders who have less stringent credit score rules.

 

Where to check for financial assistance

There are lenders in the market who have shaped their business models to cater to people who have had credit issues previously and it affects their credit score. It’s an excellent opportunity for you to get your financial footing back, and rebuild your credit score.

 

Bad-credit home loans in New Zealand are typically offered by non-bank mortgage lenders such as building societies and credit unions. Since these institutions are often privately funded, they are not subjected to the same rules as banks. Thus, they are more flexible and can take in odd cases. But you still must make your application worthwhile. A mortgage broker for bad credit mortgages can give you directions on how to do this.

 

Making your application more attractive – highlight your positives. 

Lenders, even non-bank mortgage lenders, often view borrowers with low credit scores as risky borrowers. Therefore, for your application to catch the attention of a lender, you may need to highlight additional qualities that reflect positively on you. For instance, you can show that you’ve held a steady job over the last couple of years.

It’s crucial to show that you have a steady income. This is your ticket for fixing your credit score.

Show the lender that you have savings 

You can also show that you have savings in your bank account. Lenders like borrowers who have a sort of cash reserve which could in handy in the event of an emergency. However, a huge savings balance doesn’t count as much as consistent and steady savings over a long time. Consistent savings over time also depicts that, despite your low credit score, you have good financial discipline.

 

Bring on board a guarantor

Before you get a non-bank mortgage lender to trust you, you may require to convince someone close to you that you are a responsible borrower and get them to guarantee your loan.

This may be hard to do since it means that they will be on the hook if you fail to repay. However, your spouse or a close relative may be willing to get into the mortgage boat with you and co-sign. But he or she must have a good credit score. Otherwise, their signature will not have much of an effect on your application.

 

What will a bad credit home loan cost you?

Bad credit mortgages are typically pegged at a higher rate than the average market rate. This is because of the perceived increased risk. But the opportunity cost – the benefits that you can secure – often compensate for the costs. This is especially so when you work with an experienced bad credit mortgage broker to secure a fair deal.

 

Better still, if you keep on a steady financial path and commit to improving your credit score, you’ll probably refinance the mortgage to a better deal in the future.

So, reach out to a bad credit mortgage broker and learn how you can refinance your home loan.

Can Second Tier Lenders Help Rescue Your Mortgage?

With the banks dropping mortgage rates to historic lows, many homeowners who were in mortgage trouble are looking to get a breakthrough and perhaps reclaim their homes. However, due to tough lending criteria by banks, this drop in interest rates seems like it an opportunity that could pass you by.

If you have received a demand letter from the bank or a PLA Notice, it’s hard to negotiate with the bank. You need a rescue plan before the window closes. After all, everyone knows that the interest rates will eventually come up again sooner or later.

What are your options? Can second-tier lenders help rescue your mortgage?

 

Trying Another Bank May Not Yield Much

You may be considering to try another bank for a refinancing deal. But that’s a far-fetched ambition. Each bank has unique lending criteria. But there is a common trend among mainstream lenders. Chances are if your bank wouldn’t give you the audience, peer lenders will also reject you.

Second-tier lenders or alternative mortgage lenders are an option you should consider.

Previously, these institutions were considered as the “lenders for the bad creditors.” But that’s far from the truth. They are just alternative lenders.

Who is a Second Tier Lender?

Second-tier lenders are institutions, other than banks or credit unions, that can lend to the public but are not regulated by the Reserve Bank. They, like all other lenders, must still conform to the consumer protection laws and regulations. So, you can rest assured that there’s nothing dodgy about them. However, these institutions are often funded privately (or by specific interest groups).

That means, second-tier lenders, unlike banks, don’t rely on customer deposits to lend to borrowers. Private investors take up that role.

This deviation from the traditional banking formula accords second-tier mortgage lenders more flexibility, unlike conventional lenders and banks. However, it also means that they are limited in size, thus more vulnerable to economic fluctuations.

What are the Pros and Cons of Second Tier Mortgage Lenders?

The most obvious benefit is flexibility. When you reach out to a second-tier mortgage lender it’s not a matter of whether the computer said a yes or no to your application. You’ll have a real conversation with a mortgage officer who will evaluate your application uniquely.

Better still, if you work with a mortgage broker, the broker will help you find an ideal lender and prepare your application. This doesn’t mean that second-tier mortgage lenders don’t have a qualification criteria. They do. It’s only that it may be more flexible than banks, and applications are often evaluated on a case-by-case basis.

Traditionally, borrowers have stayed away from second-tier lenders because of higher interest rates and fees. However, second-tier lenders have become more competitive, offering rates that could rival mainstream lenders. Moreover, their services are more personalized and intimate.

Rescuing Your Mortgage

You may have encountered financial headwinds and perhaps it has spiraled to a mortgagee sale situation. If that’s your position and you are thinking that your credit record is a train-wreck or no licensed lender could rescue your mortgage. It’s time you reach out to a bad-credit mortgage broker to find out more about second-tier mortgage lenders.

They have more flexible terms and could offer you a refinancing deal to give you that much-needed break. Whether you want help for a short term (6-12 months) or a medium-term (3-5 years). You can try a second-tier lender for a mortgage refinancing deal.

It may cost you slightly more interest and fees. But, if it means getting back your home, it may worth every penny.

Experiencing Mortgage Stress? Why You Should Talk to a Specialist Mortgage Broker

Are you having a hard time making your monthly mortgage payments? Perhaps your income has significantly declined over the last couple of weeks due to a relationship breakup or an unexpected financial dip. You are probably experiencing mortgage stress and you should reach out for help.

If you have missed a couple of mortgage payments and the bank doesn’t seem to understand your situation, you should call a bad credit mortgage broker. They look beyond your credit score or bad credit history to understand your situation and help you to get out-of-the-box solutions.

Read on and find out why you should reach out to a bad credit mortgage broker experiencing mortgage stress.

Who are Specialist Bad-Credit Mortgage Brokers and How can they Help?

These are mortgage brokers who specialize in advising homeowners who are in mortgage trouble, have bad credit and need out-of-the-box solutions.

Bankers and ordinary mortgage brokers often focus on “normal” applications. If your case doesn’t meet standard policy, they would most likely reject you.

However, bad-credit mortgage brokers have an outlook that everyone deserves another chance. After all mortgage stress often comes about due to an unfortunate event like losing a job or divorce. All you need is a financial break.

Bad credit mortgage brokers work with an array of lenders, including second-tier lenders. They may help you get a fair deal with a more flexible alternative lender.

 

Why Speak with a Specialist Broker?

When you encounter financial headwinds and miss a couple of mortgage payments, the bank will demand payments. Most banks have very stringent lending, and loan management criteria. Sometimes banks may not understand your situation. If the computer says no, it’s a big NO.

That’s not the kind of audience you’d want when you are experiencing mortgage stress. Moreover, making too many applications with different lenders will make your credit score worse.

If you have missed a couple of payments, you may be staring at ultimatums and threats of a mortgagee sale.

Are you in such a fix?

A specialist bad credit mortgage broker will take the time to listen to your story. He or she will gather information about your defaults and the circumstances and propose out-of-the-box solutions. It’s much better than walking straight into a rejection by your bank or other standard brokers and lenders.

What Will the Broker Do?

When you approach a bad credit mortgage broker, expect the same kind of personal questions as you would from an ordinary broker or bank. They will also request you to complete a brief form giving details of your financial position.

However, unlike a normal mortgage broker, they will help you comb your credit report, identify and understand the ‘dark spots’ and assess if it is viable to continue with the mortgage.

If it is not viable, the broker will advise you on how to make the best of the situation. If it’s viable, the broker won’t just hand you another mortgage document looking to close a deal. They will help you find alternative lenders. They will also help you to formulate a way through the current crisis.

 

It doesn’t matter whether it’s mortgage stress due to recent events or a bankruptcy issue. You can reach out to a bad-credit mortgage broker and seek help.

Do You Need an Urgent Solution to Refinance Your Troubled Mortgage?

A mortgagee sale should not be such a distant thought if you are a homeowner in New Zealand. This thought should keep the embers firing the zeal to own a home start hot enough to stay on top of your payments.

But there are times when push comes to shove, and financial headwinds could drive you first into mortgage stress and eventually into a mortgagee sale situation.

Do you need an urgent solution to refinance your troubled mortgage?

Here are the options available for you.

To start with, be clear about this, the only remedy for failed mortgage payments is a full payment. So confine your options to what eventually leads to payment, not postponement. Temporary solutions such as injunctions and stay orders by a court or complaints to any other authority are seldom and are not permanent.

You can opt for a quick sale, liquidate other fixed assets to save your home, or refinance with an alternative lender. Here’s more on these options.

Quick Sale

If there’s no agreement on debt settlement on your troubled mortgage and the process spirals to a Notice under the Property Law Act (2007), you can go for a quick sale and avert the mortgagee sale.

A quick sale is a situation where you sell the property in the window between receiving a PLA Notice and the actual mortgagee sale. This often happens when you have accumulated sufficient equity on the home and it’s in a ‘hot’ property market like in Auckland.

Quick sales are often measures to avert the stigma of a mortgagee sale. Such a tag often attracts bargain property hunters who can drive the value down.

So, reach out to a mortgage broker to help you negotiate a deal for a quick sale with the lender.

 

Liquidate other fixed assets to rescue your mortgage

Most people are unable to think straight when facing a mortgagee sale. That’s the biggest reason why you need external help, and of course, it comes with expertise.

When a lender is breathing hard down your neck, it’s hard to think of alternative ways to raise funds to clear the debt. You may even fail to see other assets that you could sell and use the proceeds to settle the outstanding amount. Do you have an extra family car or stocks you could sell and use the money to save your home?

If the situation is desperate the Kiwi Saver can transform into an emergency fund if you are experiencing significant hardships.

 

Refinancing with an Alternative Lender

There are times when the lender just does not understand, and perhaps you just need some breathing space before you get your financial footing back.

You can reach out to a bad credit mortgage broker to help you find an alternative lender to refinance the loan.

Non-bank mortgage lenders often have more flexible mortgage terms. However, the interest may be higher than what a conventional bank charges. Nevertheless, this shouldn’t be an issue since all you want is some breathing space until you get your groove back.

 

The above solutions may provide urgent relief when facing a mortgagee sale. However, that doesn’t mean that you shouldn’t act with urgency when in mortgage trouble. The sooner you reach out for help, the better your chances of finding a great solution.

Surprising Benefits from Legal Advice When facing a Mortgagee Sale

When you miss making payments on your mortgage the lender has the right to engage a debt recovery process, especially when your loan goes into default. This may end up in a mortgagee sale situation. Anyone facing a mortgagee sale should seek legal guidance from a suitably qualified professional, like a lawyer, throughout this process. But, is legal advice necessary or is it just another way to lose much-needed cash?

Are there any benefits from seeking legal advice when facing a mortgagee sale?

Read on and find out.

 

When is it the right time to get legal help

No one wants to engage in a payment battle with a lender. However, financial ups and downs are not uncommon. When you miss making mortgage payments for about 90 days, the mortgagee (or lender) is likely to issue you with a letter of demand. In this letter, the lender will indicate the outstanding amount, including interests, any fees, and penalties that have accrued, and set a deadline date by which payment should be made.

It is a good idea to reach out to a suitably qualified legal professional when you receive such a letter. This is the first step in the formal debt recovery process.

 

But what kind of help can you get from a lawyer?

Reaching out to a lawyer is not in vain, neither is it a waste of money.  when you need it the most. Here are some of the benefits you will gain when you do so.

 

A Lawyer Will Help You Understand the Mortgage Contract Intricately

Mortgage contracts are often complex and involve various laws. When you seek legal advice from an expert, he or she will go through the contract, plus any other communication that you’ve had with the bank. They will help you to understand your rights and obligations, as well as the lender. They will also help you to understand the applicable laws that govern the administration of the loan as well as formal debt recovery.

Since most lenders have competent legal departments, they are often meticulous to ensure that they don’t breach as this could be probable grounds for action. Professional legal guidance is likely to help you to focus on the right direction – alternative solutions for mortgage rescue.

 

Help in Negotiating Alternative Solutions

When you fail to pay the mortgage according to the terms laid out in the contract, you are in breach of the contract. A lender has the right to a mortgagee sale. However, this is not the only solution available for them to recover the debt.

Chances are high that the mortgagee would be open to alternative solutions including:

  • Reviewing the mortgage structure to lower the payments by extending the loan term. (A lender is not obliged to accept. However, a lawyer can help you negotiate for it and represent you at the table.)
  • Refinancing with an alternative lender.

 

Inform You How to and Help Negotiate to Mitigate Losses 

If there’s no breakthrough in finding an alternative solution, and the lender is still pushing forward with the debt recovery procedures, a lawyer can give you information and help you mitigate losses. This is often by way of negotiating with the lender to allow you to sell the property without the stigma of a mortgagee sale.

This is often seen as a better option, and in some cases, it fetches a better price for the property.

Receiving a good price puts you in a better position to clear the debt and avoid being in debt post the mortgagee sale.

 

Ensure that the lender plays by the rules

During all these negotiations and discussions with the lender on debt recovery, the lawyer will help you ensure that the lender plays by the rules. This includes giving you rightful notice, ample time, they do not mistreat you, and they follow the right channels to ensure the property gets the “best price.”

If the lender is found to have breached some of the rules, the lawyer will advise you accordingly