The term “Mortgage Arrears” refers to the situation where the parties who carry the obligations under the home loan contract are not fulfilling these obligations – ie. Home loan payments are not being made on time and are possibly one or more payments behind schedule.
When you first take out a Mortgage against your property you are required to complete and sign both Mortgage and Loan Offer Documents.
Loan Offer documents stipulate the minimum loan repayment required, as well as the frequency of your repayment. If you fall behind on your mortgage you will be deemed to be in Arrears on your Mortgage.
Home Loan arrears occur for a wide range of reasons. We have seen people experience financial difficulties with their mortgage repayments due to :
- loss of work;
- business trouble;
- failed relationships;
- illness/death in family;
- unforeseen expenses;
- identity fraud;
- tax debts etc.
While some incidence of arrears may be acceptable, if your current lender is in the process of repossessing, you may have left things too late.
One of the tests that will be employed by any potential lender is that of loan affordability. If you have been unable to pay your mortgage because of illness or a drop in income, then a new lender will not be able to assist. However, if your situation has changed and your income is now back to a level where the loan will be affordable, a refinance may be possible.
Do understand that if you have had recent mortgage arrears, it is not possible to find a lender who will approve a mortgage at a low rate. Lenders price mortgages based on risk. If you have had incidences of mortgage arrears, you will most likely be assessed as a high risk borrower and your mortgage rate will be higher due to this.