Solid Tips For Managing Your Home Payments – Avoid A Repossession
Two things first home buyers think about when they first start easing their way into the real estate market are these:
- What if I were to lose my job?
- What if the interest rates go up by a point or two?
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Well, none of us can predict the future, and hesitation for home buyers might end up being a good or a bad thing. Here are some tips to consider when it comes to managing your home payments so that unforeseen events don’t keep you constantly worried.
Home Buyers – Buy What You Can Afford
Depending on the condition of the economy, lenders may sometimes be willing to loan borrowers more money than they want or need. This requires home buyers to be smart. While many new home shoppers rely on the bank lender for advice, it is not always the best course of action.
Decide what payment amount you are comfortable with. If you both work, you might consider a payment that would be possible should one of you lose your job. If you shop smart and stay within a reasonable budget, you can rest easy knowing you did not overextend yourself.
Single Home Buyers – Being Prepared And Borrowing Smart
Here’s an example of what can happen to home buyers when you let the government help. A young 25 year old earning a moderate living working in an office started building his property profile using grants from the government.
He got overly eager and with very little cash reserves and a less than acceptable credit history, the banks allowed him still to borrow more than 95% of the property purchase price of properties. When asked what he would do if the interest rates increased by 1.5% to 2%, he stated he would have to borrow money from family.
Another single office worker also used grant money to start her portfolio. She purchased a single bedroom flat for $180,000, living in it for the required six months and then renting it out. She receives $1,000 rent each month, and this almost covers her variable rate loan repayment.
Her expenses total around $1,500 each year, but the property value has already increased $30,000 since she purchased it. She has enough savings put back to cover the payment if she lost or changed her job.
Smart home buyers who borrow smart and think ahead can survive difficult times. Just because the bank will lend you money does not always mean you should take it.
Home Buyers And Tips For Survival
Statistics show that more than 90,000 home buyers are at risk of losing their property. The majority of homeowners who experience mortgage stress should consider these tips for managing their mortgage payments.
If you cannot afford the payments on your home, the bank honestly does not want it. Home repossessions cost the bank money and usually result in a loss on the books for the lender. When you get far enough behind in repayments, you’ll receive a default notice giving you a month to catch up on payments.
This is a good time to seek the advice of a non-profit financial counsellor who can advise you of your options to avoid repossession. Some of the options that might help you keep your home may include:
* deferment of payments for a specified time period under the terms of the Consumer Credit Code
* negotiate with the lender for loan modifications such as term extension, interest only payments, or capitalising missed payments to the end of the mortgage loan
* exploring the option of accessing your superannuation fund
Ignoring the problem won’t make it go away. Seek help from someone experienced in mortgage loans who can help you make the wisest choice for your situation.
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- 16 Tips for a Better Home Loan Decision
- How To Avoid Early Repayment Fees When Repaying A Home Loan
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- Second Mortgage Tips – Ready To Get An Approved Loan Again?
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