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July 4, 2014Home Loan Arrears Case Study
Introduction to Home Loan Issues
This case study explores the recent settlement of home loan arrears involving two investment properties. The couple faced significant mortgage arrears after the birth of their baby and the subsequent loss of one income.
Initial Challenges
Several factors worsened their financial difficulties. The couple discussed their arrears with their lender and sought a home loan solution. The lender granted a moratorium on payments, allowing a temporary pause. However, the clients did not realize that the unpaid amounts would need to be settled in full at the end of the moratorium.
Negotiation with the Credit Ombudsman
The clients referred their case to a credit ombudsman while making reduced payments on their home loan. Unfortunately, the ombudsman ruled against them for two of their three loans. As a result, the lender demanded full payment of the mortgage arrears, which had grown to approximately $55,000. The couple faced multiple rejections from various lenders, leading to escalated collection activities and a pending eviction from their home, along with the loss of future investment potential on their other property.
Our Home Loan Arrears Solution
In distress, the clients contacted us. Although they now had sufficient income to cover their loan repayments, they lacked the funds to clear their existing mortgage arrears. Upon assessing their financial situation, we found that the properties were in good locations and their income had improved. This made their case favorable for securing finance.
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Negotiation and Assessment:
- We established our authority on the loan accounts and successfully negotiated extensions to avoid impending legal action.
- We assessed available bad credit mortgages that could accommodate the mortgage arrears.
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Proposal and Application:
- We provided the clients with a detailed proposal outlining the new lenders’ interest rates and charges.
- We obtained an application and ordered new valuations for the properties.
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Loan Approval and Settlement:
- The lender approved the loan, subject to valuations.
- Despite low valuations, we had sufficient equity to settle and avoid legal action.
- The settlement was made at an interest rate of 7.2%.
Analysis of the Home Loan Arrears Case
Mortgage arrears were a significant issue in this case. A substantial amount of work was required to gather and present supporting evidence to meet the new lenders' approval guidelines. While other credit problems may be more straightforward, home loan arrears payments are typically lower than new loan repayments. This is where professional assessment can facilitate approval and refinancing of arrears.
By working closely with our clients, we streamlined the process and structured their loans to reduce payments. This teamwork led to a successful outcome.
Can Loan Saver Network Help?
If you need assistance with home loan arrears or other forms of specialist finance, work with a professional who can answer your questions. Contact the Loan Saver Network today at 1300 796 850 to see how we can help you.
Key Takeaways:
- Avoid legal action due to potential additional costs and higher fees once an account goes to collections.
- Obtain multiple extensions as lenders typically seek to recover their money quickly.
- Work with professionals to ensure proper loan structuring and approval.
- See mortgage arrears case study 2.