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What if your mortgage repayment falls short?

Whether you’re affected by fluctuating interest rates or by a change in your personal circumstances, the pressure of maintaining regular mortgage loan repayments can be overwhelming at times. Here is some information to help you understand the available alternatives.


What to do before it gets worse

If you’re about to miss a mortgage payment or already have, rest assured there is help available. Taking a big breath and raising the issue with your lender is the best thing you can do – in fact, the earlier you do that, the more options your lender will have to assist you.

Failing to resolve the situation may force the lender into taking action against you. This can include:

  • Fees being applied.
  • A higher default interest rate on missed payments.
  • Taking recovery action on your home loan, forcing a property sale.
  • Enforcement charges, plus court and legal costs.


A two-way relationship

Your lender will want to help you maintain your mortgage. One option is to give your lender a hardship notice. It looks like this:

  • First, you contact your lender to explain the situation, which may require a person-to-person meeting at their office.
  • Before the meeting, consider what options are available and define a ‘plan of attack’. This will show the lender that you’re proactively searching for an answer. After all, people are more likely to want to help you if they can see you’re trying to help yourself.
  • Whatever plan you decide on, you can give your lender a hardship notice orally or in writing that you are unable to meet your obligations – your lender can guide you in this.
  • Your lender has 21 days from receiving your hardship notice to ask you for any further information it requires. If it does not require further information, it has 21 days from receiving your hardship notice to decide whether or not it will agree to change your loan.
  • Depending on your situation, the lender may come back with a scenario to ease payments for the short term, increasing them later. This may escalate your overall loan costs, but you will maintain your home and mortgage, and will be better off in the long run.
  • Your lender must give you a notice as to whether or not it agrees with to change your loan following a hardship notice. If the lender does not agree, it must give you reasons why.

Lenders do have an obligation to consider your request, so don’t think that it’s a lost cause. If the lender will not assist you, you may be able to make a complaint to an external dispute resolution scheme of which your lender is a member. Your lender can give you details of how to contact that scheme.


Helpful support

Believe it or not, you’re not on your own – every month there are mortgage holders having issues with making payments, and just as there are legal rights for home buyers, there are also legal services for mortgage holders.

Perhaps there are also other financial issues, or bills, that also need attention, in which case we offer financial advice so feel free to contact us.

Albeit a difficult and somewhat embarrassing issue, you can speak to your mortgage broker about your loan issues. They will explain your options, suggest a plan, and work with you to minimise worries and achieve a resolution.

Whether you’re a client or not, if you require more information or advice contact your local broker as soon as possible. They can help with sorting through what options are available to resolve your financial difficulties.

You can also visit Moneysmart.gov.au, another great resource for tips to help you keep up with your mortgage repayments.

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Australians give income tax cuts thumbs up.

It may only be $10 a week but the budget’s tax cut has been enough to make Australians happy.

Consumer confidence jumped to the highest level since early February in response to Treasurer Scott Morrison’s third budget released a week ago which had personal income tax cuts as its centrepiece.

The three-stage tax plan kicks off with a $530 cut for the average earner and comes at a time of slow wages growth.

The weekly ANZ-Roy Morgan consumer confidence index – a pointer to future retail spending – rose one per cent, the fifth straight increase.

In contrast, the index has dropped 1.2 per cent on average in response to the budget over the past five years.

“Consumers are in good spirits. And why not?” Commonwealth Securities chief economist Craig James said pointing to the tax cuts, a stronger sharemarket and a more settled property market.

And the Reserve Bank has again indicated it isn’t about to pour cold water on the brighter mood with an interest rate hike any time soon.

Deputy central bank governor Guy Debelle told a conference in Sydney while the economy is expected to grow faster over the next couple of years, the Reserve Bank board does not see a strong case for a near-term adjustment in the cash rate.

He expects the jobless rate to gradually decline from here.

“The unemployment rate has declined 0.25 percentage points over the past year – we are expecting something similar over the year ahead,” he told the CFO Forum.

The jobless rate was 5.5 per cent in March.

He said forward indicators like vacancies and hiring intentions remain positive, and with economic growth expected to pick up, he was reasonably confident that unemployment will resume a gradual downward trend which will also lead to a pick-up in wages.

Minutes of the Reserve Bank’s May 1 board meeting were also released and again found its members predicting the next move in the cash rate will be up, rather than down.

The cash rate has held at a record low of 1.5 per cent since August 2016.

The latest wage price index – the central bank and Treasury’s preferred measure of wage growth – is released on Wednesday.

Economists expect the index rose by 0.6 per cent in the March quarter which would keep the annual rate around 2.1 per cent and only just above the pace of inflation.

 

Article source here.

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Couple’s finances: Being in tune with one another.

In our article, ‘Recognising and dealing with financial stress’, we discussed that close to a third of Australians find dealing with money stressful. In light of this, one of our suggestions for dealing with financial stress was to talk to your partner. One of the reasons behind this is due to the conflicts and stresses that may arise between couples when there is a difference in their beliefs on money and/or their money personalities, and these differences are not appropriately recognised and addressed.

Importantly, beliefs on money and money personality can be interconnected.

Consequently, we discuss ways to help you with recognising and addressing the differences that may occur in both of these areas through the fostering of communication, mutual understanding and teamwork.

Beliefs on money

The experiences that you have throughout your life (and your interpretation of these experiences) can shape the way that you view the world and your engagement within it on a conscious level. Importantly, the same may be said in terms of the formation and shaping of your beliefs on money.

Briefly, your beliefs on money are protective or liberating ideas, thoughts, or opinions that you hold about money. Depending on your personal circumstances, these beliefs on money may or may not be beneficial or desirable to you as they can influence your financial attitudes and behaviours.

If you are unsure about how to discuss your beliefs on money with your partner or even what your beliefs may be in the first place, consider completing the following together:

Identifying your beliefs on money through language

  • Write several short sentences about money, starting each sentence with ‘I should…’ For example, ‘I should invest more for my retirement’.
  • Repeat above, but now change the start to ‘I believe my partner should…’ For example, ‘I believe my partner should save more’.

Identifying your beliefs on money through feeling

  • Write down how you are feeling right now. For example, joyful, grateful, hopeful, helpless, depressed, jealous, or angry.
  • Repeat above, but now write down
    • The feelings you believe someone who is financially insecure would have.
    • The feelings you believe someone who is financially secure would have.

Once done, read out your answers to one another and discuss how you both feel. Now take some time to engage in ‘perspective shifting’, in this instance, seeing your beliefs on money as ideas, thoughts, or opinions rather than truths. A simple way to do this may be changing ‘should’ to ‘could’ in the first exercise above and discussing how you both feel afterwards. By practising perspective shifting, you may find that you not only allow yourself to gain a better understanding of your partner’s beliefs on money, but also open yourself up to the possibility of replacing your existing beliefs on money with new ones.

Money Personalities

Why do you manage money the way you do? Many of the decisions you make when dealing with money, such as how you earn, spend and invest your money, may be done on a subconscious level. We explore this in our Money Personality learning module.

Briefly, your money personality is the set of preferences you have with regards to dealing with money. Importantly, your money personality, like your beliefs on money, can influence your financial attitudes and behaviours.

When it comes to preferences in dealing with money we are all unique, which is why we developed four money personality animals to help broadly describe the differences that can arise from one person to the next. Here is a brief overview of each money personality animal:

If you are unsure about how to discuss your preferences with your partner or what they may be in the first place, consider completing our Money Personality quiz together. Our Money Personality quiz assesses your preferences for dealing with money with regards to three key metrics:

 

Continue reading the article here.

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Sharp rise in living costs for pensioners.

Workers may be getting a little excited about the prospect of a tax cut in next week’s federal budget to help with their cost of living pressures, but new figures suggest it is retirees who may need a greater helping hand.

Consumer confidence, according to one survey, has risen for three straight weeks heading into next Tuesday’s budget where personal income tax cuts are expected to be its centrepiece.

However, despite this better mood, respondents may have been a little surprised by the benign result of the latest quarterly inflation figures released last month, particularly if they are struggling to make ends meet in a low wage growth environment.

The consumer price index, which measures a basket of goods and services, rose just 0.4 per cent in the March quarter for an annual rate of 1.9 per cent, below the Reserve Bank two to three per cent target band.

However, the Australian Bureau of Statistics also produces its cost of living indexes every three months, which measure the impact of inflation on various households.

They gauge how much after-tax incomes need to change to allow different types of households to purchase the same quantity of consumer goods in a given period.

For employee households, the cost of living is calculated to have grown at a slightly higher rate than the CPI would suggest, increasing at 0.5 per cent for an annual rate of two per cent.

The bureau blames this on a 2.8 per cent increase in education fees at the start of the new school year and a 1.1 per cent rise in transport costs through rising petrol prices.

This assumes employee households are raising children and need to travel to and from work while enjoying falls in international holiday travel if they took advantage of winter off-peak sales.

However, age pensioner households are deemed to have a greater reliance on health products and services, which rose 5.5 per cent in the March quarter.

The bureau also calculated such households would have endured a 0.7 per cent increase in housing costs, including electricity.

Overall, pensioners would have seen a cost of living increase of 0.8 per cent over the quarter, double the quarterly rate of CPI.

 

Article source here.

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Fairer wages for Aussies with disabilities.

Working Australians with disabilities should get fairer a pay deal after the Fair Work Commission ordered a new classification and wage structure to address the loopholes in the existing framework.

Stakeholders and the federal government are expected to work together with the commission to develop the new wage framework within a “reasonable time” for supported employees’ fair pay.

Australian Disability Enterprises employ people with disabilities at award wages and who need ongoing support, with tasks adjusted to suit abilities.

But under the current award, they are required to use the Supported Wage System tool to determine wage rates for supported employees which the commission found was inadequate.

“It does not take into account the proper range of work value consideration used to assess award wage rates … it may not adequately measure non-productive time at work … does not provide a sufficiently objective and relevant means of identifying the performance benchmark by which any SWS assessment is conducted,” the April 16 statement reads.

It comes after another wage assessment tool was removed from the award list in 2015 after it was found to have discriminated against workers and breached the Disability Discrimination Act.

The report found employers were able to make their own rates and classification structures, pay people differently for equivalent tasks and may even be in contravention of the Disability Discrimination Act.

Despite a modified version of the SWS to take effect on July 1, the commission found it did not go far enough to resolve the problems.

“We consider that the use of all existing wage assessment tools should be phased out over a period of time. They should be replaced by a redesigned classification structure for Grades 1-3 of the award which sets the full award age rates for supported employees,” it states.

The new national wage assessment tool will give an assessment of the size of the job and the output of the supported employee compared to a full award rate at the same grade, the report states.

The new mechanism would be trialled early in the phase-out to determine wage cost impacts and any other issues before the commission approves it into the award.

NSW-based disability enterprise The Flagstaff Group CEO Roy Rogers said the commission listened to the ADEs, supported employees, families and carers.

“It is an informed and practical decision that we can work with to ensure secure, supported, and long-term employment for people with a disability now and in the future,” he said.

 

 

Article source here.

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