Your New Years Resolution for 2025 – A Financial Detox
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There is no denying that cars have become a necessity for most people and more than a mode of transportation. Much like fashion, cars are often used as a vehicle to express their owner’s identity, can carry significant emotional attachment and quite often a symbol of one’s success – whether it be real or manufactured. After all, a young person’s first major rite of passage is securing their driver’s license.
However, cars are not a great wealth generation or preservation tool, particularly when you choose to buy one on finance. The next time you think about securing a loan for your next car, consider the following points:
A mortgage default occurs when a borrower is typically 90 days or more behind in making a repayment on their home loan. If you missed a single payment or may be behind a week or two, then that is termed being “in arrears”.
Primarily, you can expect to be charged a fee for missing a payment. Depending on the lender it may be a modest fee, or it could run into the hundreds of dollars. But also bear in mind that in not paying the loan as per the contractual arrangements you will be in effect extending the loan term and incurring an overall bigger interest charge as a result. Therefore every effort should be made to get you repayments back in order with defaulting being a last resort.
You should also be aware that a default payment will be listed on your credit file, and this will quite likely impact your credit rating and consequently future credit applications.
Perhaps the most severe outcome of continually being in default is the possibility of the lender being forced to sell your property to recover the debt.
Of course, no one goes into a mortgage contract expecting to one day default, but there are some strategies to have in place to ensure you do not find yourself in that position or at least limit the negative fallout should it arise. These include:
It is imperative you communicate with your lender as soon as possible should you default on your mortgage. Depending on your circumstance they will be able to advise the best strategy to help you through this process. Each lender has a hardship policy that you can avail, and will work with you to find a solution to see you through the difficult time.
For more assistance free legal advice is also available and can be found at ASIC’s Money Smart website.
For any other information please contact your Blackburne Mortgage Broker.
Get a great deal on your home loan with the Perth Mortgage Broker who is in your financial corner.
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