If for any reason you raise enough money to pay for your mortgage and you are worried that you may miss a payment or more call the lender right away. You should also reach out to MoneyTalks or www.familyservices.govt.nz/directory and get connected with financial advisers and mentors who are ready to help you avoid a mortgagee sale.

Here’s more on the options available to you.

Call the Lender First

Your first line of defence should be the lender. Conventional mortgage lenders in New Zealand are obliged to listen and work with you to find an amicable solution. However, this only holds if you make the distress call before your loan goes into arrears. In turn, most lenders in New Zealand have set up programs to handle hardships and avoid mortgagee sales.

When you reach out to the lender, the officer will ask you a few personal questions and request you to fill out a statement of financial position. The lender will be trying to establish:

• Why you cannot make the payments.
• Whether it’s a long-term or short-term issue.
• Your financial position. That is your income, expenses and assets like stocks and savings.

You should also reach out to the lender because it’s the mortgagee. Thus it bears the title and can opt to mortgagee sale your property.

After you’ve had a chat with the lender, it will evaluate your situation and recommend ways you can mitigate losses.

Seek insurance (ACC) or government assistance

If you can’t pay the mortgage any longer due to income loss occasioned by an unforeseen injury, you could have another way out.

Did you know that from the levies you pay, such as vehicle license and fuel taxes, you get accident insurance?

Well, the Accident Compensation Corporation (ACC) is a government entity that provides accident insurance scheme. ACC’s no-fault scheme covers everyone in New Zealand if they are injured in an accident. It doesn’t matter whether you are employed or run a business. But the best part is the cover does not only contribute towards treatment costs, but it also provides some help with your income.

If you are unable to work due to injury, visit an accredited doctor who will advise whether you are eligible for compensation. Plus, if the doctor recommends time off for more than one week, you can qualify for a compensation of up to 80 per cent of your average income.

The extra dollars will certainly go a long wat to help you avoid a mortgagee sale.

Refinance

Reach out to a mortgage broker and explore the option of refinancing to a more affordable loan.

Mortgage brokers will advise you on the current market trends, and interest rates. They will also advise you on the best-fit mortgage structure and whether it is viable to refinance to a more affordable option.

Nonetheless, many lenders put barriers and refinancing a mortgage is often not so easy or affordable. Costs such as breaking fees, valuation fees, legal fees and others may erode the savings you are looking to make.

Before you refinance, have an exhaustive discussion with an experienced mortgage broker.

Sell the Home

Lastly, if you have accrued sizeable equity on the property, and none of the options above seems to work, consider selling the home.

It’s a tough choice, but you know that it’s better to quit when you are ahead. It’s a better option than facing a mortgagee sale.

Sell the home and use the cash to buy a more affordable home. Who knows, you may have some leftover cash from the sales proceeds to handle other urgent financial needs.