Using Mortgage Hardship Variations For Temporary Difficulties
Hardship variations have come into the limelight in recent times as mortgage holders dealing with the fall out from the global financial crisis and natural disasters like the Victoria Bushfires seek temporary assistance with their mortgage repayments. Hardship variations are seen as a short-term solution to mortgage repayment difficulties brought on by either job loss, illness, injury or any other extenuating circumstances.
Applying For a Mortgage Hardship Variation
You should contact your mortgage broker as soon as you are aware that you will not be able to meet your mortgage repayments. Your local mortgage broker can help you draft a letter to your lender and help you choose the most appropriate form of hardship variation. Simply email us the form on this page or call 13 LOAN (or +61 2 9249 3739 for international callers) and we will return your contact within 2 business hours.
Types of Hardship Variation
Hardship variations can alter your loan repayment structure in the following ways:
1. Temporary reduction of each mortgage repayment amount
By extending the life of your loan, each of your mortgage repayments is reduced as they are stretched out over a longer period of time. However, as your interest rate does not change, you may find yourself paying a larger interest bill in the long term. For this reason, this method should only be viewed as a temporary measure. Should you opt to apply for a temporary reduction of your mortgage repayments, you will need to clearly state the amount you can afford to keep paying.
2. Temporary suspension of mortgage repayments
If you have a rough idea of when you’ll be able to get back on your feet, you may consider postponing your repayments temporarily. Your annual percentage rate will not change, which means that your interest charges will be capitalised to your loan balance and your overall loan term will also be extended.
3. Reduction and suspension of mortgage repayments
This method involves both an extension of the length of your loan and a postponement of your repayments for a specified period of time without a change to your annual percentage rate.
More information and home loan help
For more information on how and where to find a better home loan deal from an extensive panel of Australian banks and secure mortgage lenders, or to speak to your local area mortgage expert, contact us on 13 LOAN (direct +61 2 9249 3739)
