Advice if You’re Facing Redundancy With a Mortgage

Some will be facing redundancy with trepidation while others are looking to it with optimism. Either way, both groups will need advice around how to maintain their status as a mortgage holder.

Senior Corporate Affairs Manager for Mortgage Choice, Kristy Sheppard emphasised the importance of borrowers being on the front foot to figure out how they will meet debt obligations through such a period of adjustment.

“When facing redundancy, it is imperative for borrowers to take action early and contact their accountant and/or financial advisor as well as a reputable mortgage broker to discuss the options. There may be a simple solution at hand to address potentially altered financial and lifestyle circumstances,” she said.

“A local Mortgage Choice mortgage broker can also check a borrower’s eligibility for short-term interest free loans that are offered by some State Governments to cover temporary shortfalls as well as provide advice on whether debt consolidation may be a viable option.

“In addition, they can explain what is involved with a one-off payment variation, permanent reduced payments or a hardship variation. Or, they can look into whether refinancing extra repayments you made previously, or even moving to a different loan, is a suitable option. For example, it may be that an interest only loan – where only the interest is paid for an agreed term – may be a solution. With such a loan the principle is then repaid over the remaining term of the loan by the conversion of repayments to principle and interest”.

Whatever the change, be sure to enquire with your lender about possible fees involved and be aware that these options could see an increase in the loan term and overall interest repaid. However, on the flipside, you will hopefully feel more comfortable with repayments during an intense time of change.

“You may even be able to postpone repayments under the Uniform Consumer Credit Code. If you have difficulty getting your lender to agree to new payments terms then contact a financial advisor. Again, ensure you ask about any fees these variations will incur,” said Ms Sheppard.

“If you will receive a large redundancy payout, a reputable broker can discuss ways to maximise this in terms of your mortgage. If you are receiving a smaller payout, your funds may be better utilised in other areas of your life. Taking small steps to acknowledge your new financial situation could help you greatly in the longer term.

“Your mortgage broker can also help you determine ways to pay extra off your loan where practicable, to create a financial ‘buffer’ for challenging times and assist with debt reduction strategies to bring all your financial commitments to a more manageable level”.

It is important to note that a mortgage broker is not a financial advisor. Be sure to discuss your situation with a financial consultant or accountant who can explore your current and future financial situation and assist you with ways to manage your expenses. Money can easily disappear through unplanned spending or hasty decision-making.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.

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