If you’re struggling to keep on top of your home loan repayments, you’re not alone.
Your bank is ready to listen and consider possible solutions that are right for you.
It’s important to be open and realistic when talking about your financial position.
The sooner you get in touch, the sooner you can start to find help.
When should I contact the bank if I’m worried about repayments?
Don’t be afraid to contact your bank as soon as possible. The sooner you do, the sooner they can help you find a solution that is right for you. If you can, keep making repayments, even if they’re smaller to help keep the cost of your mortgage down.
Help to improve your situation
Taking a closer look at your budget could help you to get your finances back on track.
You’ll need to consider your income, expenses, the debt you’re managing and any savings and investments you have. Are there any changes you could make to reduce your expenses and consolidate debts?
Doing this will give you a better understanding of how much you can save or where to make some cuts in your spending to improve your financial health.
For assistance with budgeting, you could use the online Moneysmart budget planner.
This is also a good step to take as your bank may ask about your income, expenses, and any changes you intend to make when discussing options to assist you.
Are there ways to reduce my repayments?
Your bank may have a range of options to help you. However, these will depend on your personal circumstances and your bank. Some of the options that may be available include:
- Using any eligible funds that you may have in your loan redraw facility
- Talking to your bank about whether you could restructure your loan
- Reducing repayments to your minimum monthly repayment amount
- Using any savings to offset your loan balance
- Working with your bank to consolidate all your loans and finances
- If you’re eligible, you could consider switching to an interest only loan.
Your bank may also ask you for relevant information to better understand how they may help with potential options. This may include:
- Proof of income – such as recent pay slips, profit/loss statement for self-employed, rental income, Centrelink income, notice of termination and termination payments.
- Essential expenses – such as rent/mortgage payments, summary of outstanding bills and credit card statements / loan repayments from other financial providers and essential living expenses.
If you’ve contacted your bank to let them know you are worried about repayments, your bank can ask for relevant information within 21 days of you contacting them. When your bank asks for this information, you must provide it within 21 days.
My loan deferral is ending
If you agreed with your bank to defer your home loan, the deferral has allowed you to pause repayments. Once the deferral period ends, you’ll need to start making your mortgage repayments again.
In most deferral arrangements, the interest and any principal repayments you’d have normally paid during the deferral period continue to accrue and will be added to your outstanding home loan balance to then be paid after the deferred period.
When your bank set up the home loan deferral, you will have received details of the arrangement in writing. You should check what your bank said would happen when the deferral ends.
If you’ve fallen behind on your mortgage due to an accident or illness, you may have income protection insurance that could help you to keep making repayments. You may have this insurance with your super, so it’s worth calling your super fund to check.
Managing other loans and credit cards
If you’re worried about making your mortgage repayments, then you may also be struggling with one or more credit card payments and other loans too. If so, it’s important you mention these to your bank as well.
If you are managing multiple debts, there are plenty of free options to help you get your finances under control. You do not need to use a paid service. Helpful information about how to work with creditors is available through the National Debt Helpline
Take care of yourself and seek help
Contact the National Debt Helpline on 1800 007 007 and speak with a financial counsellor. Financial counsellors are qualified professionals who provide free, independent, and confidential information and advice to people in financial difficulty.
Charities and community organisations can provide urgent help with food, housing and bills as well as emotional support.
You could also contact Beyond Blue on 1800 512 348 who offer a wellbeing and mental health support service.
If you have debts with multiple banks, Way Forward Debt Solutions may be able to help you manage your debt.
Moneysmart is another useful resource to help you.