At the height of the 2008-2009 financial crisis, former Prime Minister John Key rooted for banks to give homeowners up to 12 months of mortgage holidays. It seemed like a great idea. But Martin Hawes’s rebuttal described mortgage holidays as “holidays from hell.”

The current coronavirus outbreak is expected to create economic shocks that will impact many companies. Tour operators are looking at an income loss of $180 million per month which comes from Chinese tourists. This is bound to have a ripple effect on businesses and employees.

If you don’t have some savings stashed up somewhere, you may need financial assistance or consider a mortgage holiday.

Are you planning to take a mortgage holiday?

Here’s a deeper look at whether it’s a break worth taking.

What is a Mortgage Holiday and Who Needs It?

Just as the term implies, a mortgage holiday is a break from making your regular home loan payments. Most lenders set the break between three to 12 months. It’s a temporary ‘suspension’ of your mortgage payments but hardly ‘a get out of jail free card.’

Mortgage holidays are often included as part of ‘bailout’ plans by lenders to homeowners facing temporary financial hardships. The Banking Ombudsman Scheme also recognizes them as such. But it adds a note of caution to whoever is enticed by such an option, that it may not be a great form of financial assistance.

Mortgage holidays can serve as a temporary relief for but they don’t just serve your interests.

Here’s how.

You’ll Pay the Mortgage for Longer

A Mortgage holiday, just like any other holiday, is not permanent. When you resume making mortgage payments, the loan term will be longer. Worse still, interest continues to accrue even when you are on “holiday.”

So you’ll not just get back to a stretched mortgage term but also a bigger loan!

You’ll Pay More Interest

Back in 2009, the Herald calculated the extra interest payments on an NZ$250,000 home loan due to a mortgage holiday (the rate used was 8%) and came up with a jaw drop figure of NZ$28,000. You may be thinking that the rates were off the roof at that time. But the basics do not change.

When you take a mortgage holiday, the bank suspends the mortgage payments but the interest still accumulates! But that’s not all. Since the loan term is longer, the mortgage also accrues more interest over the elongated term.

So you’ll be paying more for longer.

If you’ve been having a hard time trying to save for a rainy day, chances are it’ll even be harder making bigger mortgage payments.

How to Use the Holiday Wisely

Mortgage holidays are not fancied even by the banks. For instance, Kiwi Bank says that it should be the last resort. ANZ Bank, which commands nearly 30% of the market, scrapped standard mortgage payment holidays. The Bank now only considers applications from those who are:

• Unable to make mortgage payments for a short period.
• Need temporary assistance with repayments.
• Are certain about regaining their financial footing.

Mortgage holidays are reserved only for brief financial hardships. More importantly, you should have a concrete plan to resume payments. But that’s easier said than done.

If you foresee financial headwinds, perhaps alternative financial assistance for home loans could work for you. Talk with an experienced mortgage broker first. You’ll get invaluable guidance on options perhaps you’re yet to explore.

Facing a mortgagee sale can be a stressful situation. You may have not been able to stop the entire process from the time the lenders issued you with a demand letter and PLA Notice. But many lenders can allow you the option of putting the property on the market with a formal designation “Subject to Lender’s approval.”

Is this a good option when you are facing a mortgagee sale?

Read on and see how selling the property affects you.

How the Sale Works

When you have a mortgage, the lender retains charge over the title until the entire loan is settled according to the contract. Such a title can only be transferred by the lender. By selling the property to recover the debt or a mortgagee sale, the lender exercises its authority over the title.

However, mortgagee sales cost the lenders administratively and often attract bargain property hunters who can drive the sale price down. Also, the stigma of mortgagee sales can be embarrassing to the customer.

Lenders can give you the leeway to look for a potential buyer, and negotiate for a price without the “mortgagee sale” label hanging over your head. In such a case, once you have a deal with a potential buyer, you should take it back to the lender for approval. There’s no guarantee that the lender will agree to the deal but a successful sale would translate to the lender saving on administrative costs and you’ll avoid loads of embarrassment.

But that sounds like a fairy tale. The truth is, it’s hard to find a fair buyer when the bank is breathing down your neck. It may be better for you to get an emergency refinancing solution to buy time and some peace of mind.

There are many benefits to taking this route.

It Protects Your Credit

By the time a lender issues a Notice according to the Property Law Act (2007), your credit score must have reduced significantly. Repayment history and the nature of credit are significant components of scoring models. However, urgent refinancing helps you to restore your credit dignity and avoid a mortgagee sale.

A record of a mortgagee sale record on your credit report has a bigger impact on the credit score and would just torpedo your credit score to the bottom. Plus, there’s no guarantee that a mortgagee sale would fetch a good price and cover your entire loan and expenses. So you may end up bankrupt.

Emergency refinancing before you sell the property, on the other hand, gives you a chance to get back in the “credit game.”

It Gives You More Control

When a lender engages the process to mortgagee sale your property, the lender can unilaterally appoint a valuation expert, a marketing agent, and evaluate the offers. The home could also be sold via auction. The lender is not obliged to seek the best market rates. Also, when the lender gives you leeway to sell they can veto the deal.

This leaves the homeowner with few options as to how the property is sold, and at what price. In hot property markets such as Auckland, bargain property buyers look for such opportunities to cash-in.

On the other hand, urgent refinancing before you sell the property gives you more control. You can evaluate each offer against market rates.

When you get a mortgage you become a homeowner. However, the lender retains charge over the title of the property until you settle the entire loan according to the contract. The bank can sell your home if you don’t pay your mortgage. It’s called a mortgagee sale.

But banks and other mortgage lenders don’t like to take this route. It’s bad publicity, and it sends a negative vibe to existing clients. Most lenders would rather go through many rigorous legal steps to avoid a mortgagee sale or to give you a chance to resume making mortgage payments.

Here’s a look at what lenders do to avoid mortgagee sales and what happens when you fail to pay the mortgage.

Lenders will Ensure the Loan Meets Your Needs

It’s not easy to make regular mortgage payments each month or fortnight without fail for decades. You must have a compelling motivator. This is why banks want to ensure that the mortgage fulfills your needs. This will be your motivation to keep up with the mortgage payments.

The bank will ask a few questions including:

• How much you want (market value of the home).
• Whether you would want to protect the home through products like mortgage insurance.
• How you plan to make payments? If you want to make regular payments of similar amounts throughout the loan term or if you may occasionally want to make lump-sum payments.

The bank will also review your income and expenditures to ensure that you can meet the mortgage payments, including applicable fees, and pay your other regular bills without straining your finances. However, each mortgage application is determined on its merit.

Banks are thorough when processing mortgages and follow the responsible lending code. But what happens when circumstances change and you fail to pay the mortgage?

The Bank Will Engage the Formal Process of a Mortgagee Sale

If you are unable to pay your mortgage, the bank is expected to treat you with respect. But that doesn’t mean they will be easy on you.

The intention of the bank is first to make sure that you regularize the account. Secondly, the banks give you a chance to discuss any underlying hardship that may have caused the default. There are various options and solutions in cases of hardships.

When you consistently fail to pay, the bank will issue you with a letter of demand and a mortgagee sale may be inevitable.

Don’t wait until the bank engages the formal process for a mortgagee sale. By the time such a decision is made the late payments and missed payments would have negatively impacted your credit history, attracted penalties and inflated the debt tremendously. You may need extraordinary financial assistance to avoid a mortgagee sale.

Urgently reach out to a trusted mortgage broker to help you find urgent refinancing and save your home from going to a mortgagee sale.

If you are having trouble paying your mortgage it could mess up your credit rating and land you in mortgage trouble. The possibility of losing your cherished home can be frightening and stressful.

You must find a remedy quickly and restore your finances in order to resume regular mortgage payments.

But sometimes the bank just doesn’t understand your situation.

Perhaps the financial storm has lasted longer than you expected. Or maybe the mortgage no longer fits your current lifestyle.  Should you consider shifting to another home loan lender?

Read on and find out how you can salvage the situation and change the lender.

When the Mortgage Doesn’t Suit Your Needs

Mortgage lenders in New Zealand must follow the Credit Contracts and Consumer Finance Act (CCCFA). On the other hand, mortgage brokers must act with “skill and care” guided by the Financial Advisers Act. This is to ensure that the loan is affordable and that you can “make your loan payments without suffering substantial hardship.”

However, your circumstances may change in the middle of the mortgage term. It may be a strain to continue paying your mortgage in your current status.

When a mortgage doesn’t suit you, you have an option to reach out to the lender and restructure it. But, this only applies when the mortgage is not in arrears. Also, you may have to contend with breaking fees.

If the loan no longer suits your needs, and the bank is unwilling to understand, urgently reach out to a trusted mortgage broker.  You need immediate help to plan your finances and take look at options such as emergency refinancing.

Refinancing Will Help You Settle Other Loans

One of the options that will be available to you when discussing with the mortgage broker is refinancing. You can refinance within the same lender – when you borrow against the home’s equity. Or it can be with a different lender. That is when a different lender “buys-off” the mortgage.

The bank may be unwilling to refinance your mortgage especially if you’ve missed a couple of payments.

Before you consider refinancing with a non-bank lender reach out to a trusted mortgage broker to give you an unbiased view of what to expect according to your circumstances.

If you have been servicing the mortgage for a while, and you are facing financial headwinds, emergency refinancing could give you the lifeline you need.

When to Shift Lenders

Emergency refinancing comes may come with a fair share of costs and technicalities. It’s advisable to walk through the entire process with a trusted mortgage broker and legal advisor. It is also recommended that you seek an alternative lender to take up the mortgage once you’re are back on your feet.

Lenders in New Zealand have different criteria and sometimes the best options for saving your home could be in non-bank mortgage lenders. However, such a decision should be guided by an objective assessment of the costs versus the benefits of each option.

There may be no cash savings. But a different lender could give you more flexibility or better rules. This could be what you need to avoid a mortgagee sale.

Whatever’s causing you to have trouble paying your mortgage, emergency refinancing can help you keep the home. Just reach out to a trusted mortgage broker to help you through the process.

I like the old Maori proverb, Ma whero ma pango ka oti ai te mahi – With red and black the work will be complete. It doesn’t just remind us of how it is important to cooperate to reach a goal, it tells us how we can use different resources to attain a goal.

Not all Kiwis can afford to purchase a quarter-acre piece of paradise in the suburbs with one or a few payments. Mortgages provide an essential route for Kiwis to afford homes.

But traditional mortgage lenders, such as banks, may have difficult criteria and you may find yourself in mortgage trouble frequently.

If that’s your story it may be worthwhile to look at non-bank mortgage lending.

Who are Non-Bank Mortgage Lenders

According to the Reserve Bank, non-bank lenders are institutions that have been licensed to offer loan products but do not take deposits. That strikes off banks, building societies, and credit unions.

Since these institutions don’t rely on the public’s savings to lend, they do not need to hold a banking license. But that does not mean that non-bank mortgage lenders are under any less scrutiny or regulation by the Reserve Bank.

On the other hand, by the nature of their business models, these lenders may not have the financial muscle as banks, but their flexibility is incomparable to banks. Perhaps this is the reason why more Kiwis are trusting them. As of 2018, the lenders had grown their share in the home loan market to NZ$2.5 billion, a staggering 27% growth.

What kind of financial assistance is available?

Apart from the standard home loans as you would be familiar with from the banks, non-bank mortgage lenders offer more flexible terms and extraordinary home loans like:

• Low doc home loans
• Split-rate mortgages.
• Bad Credit mortgages

The bad credit mortgages are just as the name implies. If you’ve missed a couple of payments on your mortgage. Or maybe you are facing a mortgagee sale. You can get urgent financial assistance on your home loan, even with a bad credit record, from a non-bank mortgage lender.

The lender will charge slightly more to cover for the higher lending risk, but that may be a price worth paying to save your home from going to a mortgagee sale.

Why You Should Consider a Non-Bank Mortgage Lender

For starters, when you experience financial difficulty you want a partner who is flexible and can relate with you at a deeper personal level. Unfortunately for banks, their strength and size are also their Achilles. It’s hard to relate with customers on a personal level. Due to their size, banks must comply with a myriad of regulations and adopt ‘controls-based’ structures. On the other hand, non-bank mortgage lenders can adopt a more ‘customer-oriented’ structure and meet a wider range of client needs.

Most non-bank lenders in New Zealand are also customer-owned. Thus, they are not driven by profits and unquenchable shareholder demands. Instead, customers (who form the ownership) mark their values, mission, and objectives. With this in mind, they can offer competitive rates, and fees as well as less stringent mortgage qualification criteria.

If you are experiencing mortgage payment troubles, reach out to your lender and discuss how you can save your home from a mortgagee sale. If you are dealing with a bank and they seem not to understand your situation, talk to a trusted mortgage broker. They will help you get financial assistance from a non-bank mortgage lender.

The road to a mortgagee sale often seems like an unstoppable downward spiral. If you do not urgently seek financial assistance, you may find yourself unable to meet your obligations and lose your biggest investment yet.

Perhaps you’ve lost your job or had a relationship go south. Maybe it’s an illness that forced you out of work or the death of a breadwinner. Financial experts say that a debt spiral, which may lead to a mortgagee sale, is very likely. But it is preventable. The first step, keep up with your repayments and don’t default on your mortgage.

Below are tips to help you avoid defaulting on your mortgage.

Reduce the Mortgage Balance Fast

Since you are well-able to meet your mortgage payment obligations, don’t settle for a mundane routine payment every month. You don’t know what the future holds. Strive to reduce that mortgage balance fast.

The average mortgage size for the first time Kiwi Homeowners is slightly over NZ $400,000. An extra NZ $100 each week on your mortgage payment may seem like a drop in the ocean. But, when you pay it more often, it goes a long way in reducing your balance. You can reduce your mortgage balance by:

• Diverting any extra earnings towards your mortgage payments.
• Maintaining the same payment levels even if the rates dip.
• Increasing your repayment frequency, say from monthly to weekly or every fortnight.
• Reviewing the structure of the loan, say to a revolving credit mortgage, and boost repayments.

Maintain a 3-month Mortgage Repayment Fund

Job losses, illnesses, death and break-ups always seem to catch us off-guard. But you can plan for that rainy day. Try and build up a 3-month mortgage repayment fund to help you create a time buffer that will help you absorb the shock and get your thinking cap again.

If you’re struggling to plan your finances, you can get help with budgeting.

An income loss is a huge emotional blow. It would be more devastating if you are served with a PLA Notice and put on the mortgagee sales list shortly after.

So, guard yourself against the worst.

Don’t Hesitate to Inform the Lender 

Don’t wait until it is past the payment date of your monthly mortgage bill. The first default could be the stumbling block that leads to a mortgagee sale. Instead, inform the bank or lender about the financial dip as soon as possible. Let the lender know the circumstances that led to it and:

• Why you cannot meet your mortgage payment obligations.
• You are willing to continue making payments.
• What you can afford for now.
• Ask for help either as a payment break or by restructuring your mortgage.

There are many ways the bank or lender can come to your aid. Plus, if you take up this step before you fall into arrears, the bank or lender is obliged to work out a solution with you.

These tips will go a long way in keeping you from defaulting in your mortgage and the prospects of a mortgagee sale at bay.

When a bank lends you money to buy a home, the bank secures a charge over the property. Upon full repayment, the lender discharges the property. However, if you fail to make payments, the lender can take possession of the asset and sell the property to settle the loan.

Mortgagee sales are often stressful. It is not in the best interest of a lender but a last resort to recover a loan. This is partly why lenders have a robust screening process and in many instances propose various insurance products.

Nonetheless, there are instances when push comes to shove, and a mortgagee sale is inevitable.

Below is a brief outline of the mortgagee sale process, and what you should do.

The Recovery Process

The lender will not take your property to mortgagee sale your home after missing just one payment. Lenders are obliged to go through a rigorous process of requesting, negotiating and demanding payments. Consistent non-payment will see the lender first write a letter of demand and follow up. If you don’t pay, the lender will engage the Property Law Act 2007, and serve you notice.

What to Do if You Get a Property Law Act (PLA) Notice

If you’ve received a PLA notice, it means that you have not been servicing your mortgage satisfactorily for a while. It should not be a surprise. Nonetheless, it is very distressing.

A PLA notice contains details of the default and a demand for payment of the mortgage by a specific date. Lenders serve PLA notices in person. However, if you are unreachable, the lender has the option of making it public in a newspaper.

If you fail to pay by the stipulated date, the lender has the right to repossess and sell the property to recover the debt.

But the situation is not beyond salvage. Here’s what you should do.

Don’t Ignore the PLA Notice

Upon receiving the PLA notice, the threat of losing your hard-earned home is real. So, don’t ignore or belittle the damning situation. Take action.

It is advisable to first seek legal advice from a suitably qualified professional e.g. an experienced lawyer or legal representative. She will explain what a mortgagee sale means, the legalities of the mortgagee sale process, and the lender’s rights as well as your rights. Under the Land Transfer Act 2017, you can modify the terms of the mortgage.

Reach Out to a Mortgage Broker and Review Your Financial Situation

Mortgagee sales are an outcome of home loans gone bad. Therefore, it makes sense to include a mortgage broker in your list of people to consult. After all, they are the mortgage experts.

Discuss the circumstances of the current loan exhaustively and lay bare your financial position. It will give the broker tools to craft a rescue plan.

Hatch a Bespoke Mortgage Rescue Plan

Armed with information about your lender, the loan and your financial position, the broker will work with you to hatch a mortgage rescue plan that fits you.

A mortgage rescue plan is not an easy way out of a mortgagee sale. But it is workable and will be your best chance to salvage the situation.

Contact the Lender and Offer Solutions

Although the lender is not obliged to accept the proposed mortgage rescue plan, remember their primary intent is recovery, not to mortgagee sale your home. Lenders will often pay more attention and consider solutions offered via professionals such as mortgage brokers or lawyers. A listening counterpart is crucial for fruitful negotiations towards stopping the mortgagee sale.

Stick to the Rescue Plan

When you agree with the lender, and mortgage broker or lawyer over the recovery plan, set it in motion and stick to the plan. Your home and sanity depend on it.

There is no winner in a mortgagee sale situation. Both parties lose. The borrower goes through immense stress, and the lender loses a client. The mortgagee sale process also sends a ‘negative vibe’ to other clients.

Lenders prefer to avoid a mortgagee sale situation. Nevertheless, when the borrower is persistently unresponsive, the lender will engage the full recovery gear.

What signs will tell you that a lender has shifted to full recovery and about to mortgagee sale?

Read on and find out.

You’ve Been Unresponsive to Efforts by the Lender to Contact You

The first place to look is within. How responsive have you been to the bank’s efforts to contact you?

Banks often reach out whenever a client misses a mortgage payment. It usually begins with a polite reminder, then a request to regularize. After these reminders, the bank becomes more assertive and demands payment.

These calls are meant to avert a mortgagee sale situation.

Don’t hide your head in the sand or be unresponsive. Talk to your bankers about the financial difficulties you are facing. Under the Credit Contracts and Consumer Finance Act (CCCF Act) you have the right to request the lender to reorganize the loan provided you’ve not missed your mortgage payments.

So get in touch with your lender, and a mortgage broker to avert a mortgagee sale situation.

Received a Letter of Demand

This is the first indicator that the bank has engaged the formal process of recovery through a mortgagee sale. The letter will outline the amount in question and stipulate a deadline date by which you are to settle the arrears.

You should find a way to settle the debt. However, if you cannot remedy the debt as described in the demand letter, you should seek professional advice independently. A mortgage broker who specializes in how to stop mortgagee sales and a legal advisor, like an experienced lawyer, are excellent places to seek help.

Do this before you are the home is put up for sale through a mortgagee sale.

Received a PLA Notice

If you took the wrong turn and failed to respond to the bank’s demand, the lender can invoke the Property Law Act 2007, and issue a PLA Notice.

Like the letter of demand, the PLA Notice is required in the mortgagee sale process. It outlines the outstanding amount and a date by which you must settle. If you fail to clear the debt, the lender will have the right to repossess and sell the house to recover the loan.

You can still talk to the lender after receiving the PLA Notice and negotiate for more time or a settlement. Your best chance of stopping the mortgagee sale is by working with a mortgage broker and an experienced legal advisor such as a lawyer or solicitor.

But the bank is not obliged to agree to your proposal.

You Cannot Meet the Conditions on the PLA Notice

When a lender issues a PLA Notice, one of the conditions in the notice is to clear the debt. If you cannot pay the loan, the lender will sell your home to recover their money.

If you are in this position, try and stay positive and proactive. Lenders would prefer you organize the sale rather than to force their way. Try to sell the house at market rate. Hopefully, the amount should be sufficient to cover the debt and costs.

A mortgage rescue plan is a term used to describe a strategy to stop a mortgagee sale. The term sounds macho and has a sense of urgency because in most cases, the borrower is desperate to be ‘rescued.’

The lender would have already triggered the process by serving a demand for payment, and a Property Law Act Notice (or a PLA Notice). The PLA Notice outlines the default amount and gives a deadline date in which the borrower must remedy the default. If the borrower fails, the lender takes the next step of repossessing and selling the property.

You can get help to stop a mortgagee sale. But you must be involved in the plan.

Here’s what you’ll go through when making the plan.

Reach Out to A Mortgage Broker

The first person to make a move to stop a mortgagee sale is you. There’s no such thing as a universal mortgage rescue plan that works for everyone. It’s unique to you and your situation.

You must accept the situation. Agree that you are in financial difficulty, it’s probably not going to get better any time soon, and you’ll lose your home if you don’t seek help. It is also advisable to seek legal advice from a qualified professional such as a lawyer.

Be sure to do this right away since wasting time is not a card you can use when trying to stop a mortgagee sale.

When you reach out to a financial advisor, verify that he or she is registered with the Financial Service Providers Register.

Be Completely Honest About Your Situation 

When you’ve settled on an advisor, the first thing he or she will do is to try and understand your situation. They will seek to understand you, the borrower, the circumstances, and the lender.

Be an open book and layout all your financial issues. You never know which one could be the best bargaining chip. But be honest and don’t fabricate anything.

Compare the Mortgage Balance Vs the Home Value

In a mortgagee sale, the lender has only one objective, to clear the outstanding debt. Although the mortgagee sale process requires the lender to seek the best possible price, the lender is likely to look for a price that can repay the loan and any other costs incurred in the recovery process. If the property fetches a better price, the extra money will be paid back to you. However, if the price does not meet the lender’s needs, the lender still has the right to pursue you for payments.

Therefore, you must know the value of the home and the mortgage balance.

It is also important to note that due to the unusual circumstances, mortgagee sale homes often don’t fetch the rightful price. So if the sale price doesn’t cover the debt, you could be facing a bankruptcy situation.

Check Options to Get You Out of the Red First 

The next move would be to handle the immediate danger. You must negotiate with the lender for more time and get financing to stop the mortgagee sale.

Since your credit status is already marred by the unpaid mortgage, financing this step may be more expensive than ordinary loans. Also, you may need a guarantor. But you must look for a long term solution.

Seek to Refinance or Downgrade

After you’ve cleared the immediate danger, you can opt to refinance the mortgage with a new lender. You will probably need a guarantor for this one too.

Alternatively, you could also sell the property without the ‘mortgagee sale’ stigma and downgrade to a more affordable property.

Remember, your mortgage rescue is unique to your situation. A mortgage broker experienced in crafting mortgage rescue package can get you out of trouble.

Life can throw a curve at you and push you beyond your means. If something that creates a strain on your finances happens, and you cannot afford to make your mortgage payments, don’t hide it. Act fast!

The sooner you take action, the better the chances of avoiding a mortgagee sale.

If you fail to make your mortgage payments, here’s what you must do.

Don’t Hide Your Head in the Sand Take Action

Mortgagee sales in strong markets such as Auckland can happen because people find themselves in a difficult financial position.

For many people in New Zealand, inability to make mortgage payments is a major strife. Many who fall into financial hardship can sometimes try to hide it. But like many fast-spreading issues, silence will worsen the situation.

Don’t hide your head in the sand. Take action, get advice and inform your lawyer, financial advisor, and the lender. According to the Banking Ombudsman Scheme, the sooner you alert the lender, the better your chances of averting a mortgagee sale.

If you come forth early, at least before you miss an installment, the lender is usually obliged to consider your circumstances and could negotiate a workable solution.

Re-read the Mortgage Documents

As you prepare for a meeting with the lender’s rep or a mortgage broker, take some time to fish out the mortgage documents and read them again. This time read them with a discerning eye.

Pay close attention to the ‘failed payments’ section. It contains details of what action the lender will take if you miss payments in line with the contract as well as what steps the lender will take before resorting to a mortgagee sale.

As the adage goes, to be forewarned is to be forearmed. So, arm yourself with this knowledge first.

Know Mortgagee Sale Owners Rights

As you interact with the terms of the contract, and financial advisors, learn more about your rights as the owner. Mortgagee sale homeowners also have rights. But, this is not an acceptable excuse for failing or delaying to contact the lender.

Under the Credit Contracts and Consumer Finance Act, you can present your situation to the lender and request a change in the terms of the contract.

Some of the options the lender may offer are:

• Changing the frequency of payments e.g. from weekly to monthly;
• Extending the term of the home loan e.g. from 15 years to 20 years. This effectively lowers your payments;
• Changing the structure of the loan. The lender may change the structure such you pay interest only (which is lower) for a predetermined period.
• A mortgage holiday.

It’s important to note the following:

• Lenders typically give breaks where the financial difficulty is triggered by a genuine misfortune. It could be a job loss, relationship break-up, or death.
• The offer for a break is probably only on the table as long as you’re not behind on your mortgage repayments. So, act fast!
• Whereas such breaks will give you temporary relief, you will end up owing more in the long run.

Reach Out and Learn More About Mortgage Rescue Packages

If you’ve fallen behind on several payments, chances are the lender has already sent (or is considering sending) you a demand for payment and is preparing for the prospect of a mortgagee sale. This is the first of formal steps towards the forceful recovery of the loan. If you are still unable to pay, the lender will issue a PLA Notice which sets you up for a mortgagee sale.

If you’ve received a PLA Notice, it is generally advisable that you seek legal counsel from a qualified professional like a lawyer.

Reach out to a mortgage broker and develop a mortgage rescue plan for your home.