“Loan Saver Network Director – Colin Kidd” – After many years working in the Mortgage Industry I have witnessed a number of common situations that cause Home Owners to fall into Arrears on their Mortgages. What are the common causes of Mortgage Arrears ?

The first thing to note is that Home Owners suffering from Mortgage Arrears largely find themselves in this situation for the first time having never been behind on loan repayments in the past. It is usually an unexpected and therefore unplanned life event that initially triggers falling behind with mortgage repayments. This could be an event such as:

Logo Button One partner in a couple losing a job

Logo Button A partner or child falling ill

Logo Button A death in the family

Logo Button Separation/divorce

Couple giving two young children piggyback rides smiling

Secondary Effects – If we were to look even closer at an event such as one partner falling ill, we would also see secondary and other impacts. Impacts such as the partner who is well having to reduce hours at work to look after the ill partner. This could reduce a families income to 1/4 of the pre illness income. If the family’s debts were indicative of the average two income family, for example Home loan, 2 or 3 credit cards and two car loans; it would be a very short time before this family was in serious financial difficulty.

Home Loan Arrears Compounded – Once in Arrears on your Home Loan and other debts, it can take substantial effort to get back on track. In the example above with Home Loan repayments of say $1400 pcm (per calendar month), two car loans of $400 pcm each and three credit cards of $600 pcm repayments; they would fall behind by $2800 pcm! In just two months this family would be more than $5000 behind in repayments and the ongoing maintenance of the continuing debt.

Home Arrears Solution: There are a number of solutions to rectify your Home Loan Arrears, Debt Consolidation, Personal Loan, Refinance. Home Loan arrears solutions need to be carefully structured as Lenders are most hesitant with Arrears and their NCCP Act (National Consumer Credit Protection Act) obligations.

Home Loan Arrears account for approx. 1.3% (2010) for Full Income documented loans and up to 8% for low doc loans. These percentages can be considered low though also common place to occur at some point in the life cycle of a home loan.

If you find your self with an arrears issue, contact Loan Saver Network on 1300 796 850 to discuss your options.