Mortgage Default Question

All banks have put concessions in place for customers in financial hardship however you have a couple of problems.

1. Split banking: banks support their loyal customers. When you have split banking the banks have no way to assess your overall position on an ongoing basis e.g. Less ability to monitor you through your “hardship”. An example of this is waiving interest (yes all the banks can go as far as waiving interest for a period of time) – they will not waive interest if it simply allows you to maintain a debt with a different lender. They generally won’t consider waiving interest if multiple banks are involved – they also all will want to be first in line to part payments so it is near impossible to satisfy one without upsetting another.

2. Your properties are investment with even your own home in a trust. Depending on the strucutre e.g. If it is a company as trustee :- you won’t get the same consessions you normally would if it was your owner occupied house. Loans to companies are unregulated under UCCC along with loans for investment.

3. The banks credit / recoveries areas that manage clients in arrears have a common criteria. If the problems were unforeseen e.g. Being sick or made redundant etc – they all apply concessions. However if the problem is considerred self inflicted e.g. You left your job to start a business which did not go to plan – you can potentially be sent directly to recoveries. The majority of clients in recoveries with all banks at the moment are property investors- in many cases the clients have simply over-commited and underestimated the cost of property investing. The true unforeseen circumstances are far less common than the people overcommitting to invest without properly considering the impact on their cashflow.

One very important thing is whether or not you disclosed your liabiliies to each bank when you applied for finance. If not your loan applications were potentially fraudulent which could result in a very harsh a fast responce from the banks.

Personally: I would support the lender with your home to ensure they are paid first. Prioritize the lenders based on which properties are more important. Contact all of them and request information on their hardship program.

All banks have brochures in the branch outlining options in time of hardship so don’t feel that info is not available. Just go to your local branch for a brouchure – it will have all relivant contact numbers required.

Good luck.

You might be right.

If the owner occ is in personal names it should be covered under the banks hardship policy. Assuming all debts were disclosed at time of application.

Either way it is important to keep communicating with the lender if you are going to be short on the payments.

Banker

You may be eligible to access some of your super under financial hardship reason