What Happens If You Can’t Pay Mortgage? Sydney Civil Litigation Lawyer

Mortgage interest rates have been rising for a long time due to inflation. As a result, many property owners in Australia struggle to pay their mortgages. And if you are one of them, it’s essential to speak with the best civil litigation lawyer in Sydney and be aware of what you can do during the crisis. There are several options to assist with mortgage repayments during financial hardships. 

So, don’t fret and read the following section for a brief guide on what to do when you can’t pay the mortgage. 

What If You Can’t Pay Your Mortgage? Sydney Civil Litigation Lawyer

The lender will send you a default notice when you can’t pay your mortgage rate. Here’s what the process may look like:

Default Notice: The lender or your bank will send you a default notice when you miss the payment. This notice will outline the period the mortgagor has to clear the overdue payments. Typically, mortgagors get around 30 days.

Statement of Claim: The bank will commence Court proceedings if they don’t receive the payments within the outlined time. In this instance, the mortgagor can respond by filing a defence. If you don’t respond to the notice, the bank may go with a default judgement. It can lead to repossession of the property by the bank by Court orders.

Eviction: After the default judgement, the bank will notify you to vacate the property before they take possession of it. The local sheriff may attend the property to evict the people and change the locks.

How Can You Address The Situation?

If you receive a default notice, take advice from a property and civil litigation lawyer in Sydney immediately. They may advise you to do the following things:

1. Contact Your Lender For Financial Hardship

Hardship assistance refers to negotiating with the bank to modify the mortgage terms. 

The available options for hardship assistance may include

i) Temporary payment reduction if the bank believes your circumstances are temporary and will improve over time

ii) Extended mortgage payment date, including the overdue payments and overall interests

iii) A brief pause on your repayment obligations until the situation improves

iv) Offer to enter a payment plan

v) Or a momentary transition to interest-only payments

Applying For Hardship Assistance 

i) Contact the hardship team or officer of your lender.

ii) Give your loan account details, like account number, name and payment information.

iii) State your requirements, like you want to change the loan repayment due to financial hardship.

iv) Explain the reason behind the difficulties, tell them how long the situation may last and how much you can afford regarding the payment.

v) Consider hiring a professional lawyer to write the letter.

Once you have sent the letter, you can expect a reply from the bank within 21 days. 

If The Lender Accept Your Hardship Assistance Request

Your lender will discuss the best hardship options, change loan terms or reduce your payments. Remember to hire a civil litigation lawyer in Sydney to negotiate the amount you repay based on how much you can afford to repay every month or fortnight. And if you find it hard to meet the new terms of the payment plan, discuss it with your lender as soon as possible.

Here’s how to tackle the next steps:

i) Analyse your situation and create a budget to see if there’s anything you can cut back on.

ii) Also, you can speak with the hardship teams of your utility providers to pay the bills in instalments or check if you can get cheaper providers.

What If Your Lender Refuses The Hardship Variation?

If the lender refuses your request, they must provide you with a solid reason behind it. If you are unhappy with their response, contact their dispute resolution team. Still, if both parties fail to reach an arrangement, you may connect with the Australian Financial Complaints Authority to complain and receive independent dispute resolution.

2. Consider Selling Your Home If Hardship Assistance Does Not Work

If you think your situation is unlikely to improve, consider selling your home. It may be a tough decision, but it’s better than having the lender sell the property. Selling the property without the lender can help you get better rates and avoid paying lender-associated costs. Another way to repay the mortgage is to rent out your home while you live somewhere else.

Bottom Line

Hardship assistance can go either way. So, it’s best to stay prepared and hire a civil litigation lawyer in Sydney to guide you through the procedures. They can help you file a defence or negotiate with the bank. You can also take their guidance to determine whether it would be more beneficial to sell the house.