Many people have to deal with the fear that they may lose their home if they fail to make their mortgage payments on time. It can get very messy if you don’t know how to deal with the situation. Is your mortgage lender trying to take your home away from you? Let’s discussion house repossession and find out innovative ways to tackle this problem effectively.
Reorganize your debts and pay the most important ones first
Your mortgage should be your utmost priority when choosing between which debts to pay back first.
This is very important. In a situation where you are having problems with paying your mortgage, you need to complete an entire budget sheet first and foremost. It should revise what your income and expenditure is while setting out a small amount of cash saved for paying your mortgage.
This list should be hierarchical from top priority to least priority basis. If you don’t get done with paying your bank loans and overdrafts, you are letting it affect your credit rating. These non-priority debts include letters and calls from creditors demanding that you pay them off. By keeping a budget sheet, you can maintain a contractual payment that will help the lender avoid initiating a repossession action against you.
What happens if I haven’t paid my mortgage?
If you have not paid your mortgage in more than two months and you also have not contacted your mortgage company, the lender is entitled to apply to court for a repossession claim against you. Without a court order, you cannot be evicted.
Make sure to talk to your mortgage lender
Talking to your lender can delay or even end the prospective of a repossession action against you.
A temporary solution could be to switch to an interest only mortgage or apply for a hardship provision with your bank. Whilst many non bank lenders do not offer hardship principles, the major banks offer extended hardship provisions and may allow a temporary moratorium (up to 12 months) on your repayments due to factors such as sickness or job loss. The banks make decisions on whether to apply these principles on a case by case basis.
Restructuring Your Debt
It may be possible that by restructuring your debt you may be able to avoid repossession. Consider the following situation.
Susan owes $150,000 on her mortgage, $47000 on two car loans and $6000 on a credit card. Her total debt is $203,000.
Her total month repayments equal approximately $2,600 under this scenario.
If however, she consolidated her debts into one loan with a different lender she may be able to reduce her monthly repayments to approximately $1500. The remainder could be used to pay off the mortgage quicker.
The reduction could be the difference between Susan keeping her home or having it repossessed.
How much time does repossession typically take?
The entire repossession process can take around 6 months from falling into arrears to practically being served with an order in court.