Unfortunately many home buyers who bought in the last property boom ended up paying more than what they could afford to pay for their family home. This overspending has been compounded further by the latest credit squeeze which originated in the United States but has managed to hit Australia’s working class families hard by making it harder for them to refinance. This has forced many lenders to raise market interest rates outside the Reserve Bank of Australia’s (RBA) recommendation to cover their costs from where they source their money.

The current rate of inflation being felt in Australia is a further kick in the face as it is causing interest rates to rise to levels previously not seen for over 10 years. The Reserve Bank of Australia has indicated that there may be more rises to come so brace yourself for more hurt and use our tips to help you plan for the rocky road ahead.

• Foreclosure is process that is difficult to stop once it has been started; therefore it is imperative that you let your bank know as soon as possible that you are having trouble meeting your home loan repayments. Most lenders are more than happy to structure and revised payment plan that will prevent you from getting your house repossessed. Think about it; do banks make money when they repossess your house and sell it for a cheaper price? The truth is that nobody wins so keep your bank informed if you are having trouble and be honest.
• Cut down on needless spending. Do you really need that 84cm plasma television you were planning on buying? Living within your means is an essential part of financial planning and you’ll be quite surprised to find out how much all those little things add up to.
• Government legislation provides protection for those who have been the unfortunate victim of poor health or injury. The Consumer Credit Code outlines the responsibilities lenders must adhere to when dealing with customers with the these problems. If you have lost your job you may also be able to claim leniency depending on the circumstances.
• Your superannuation may be able to help you pay your home loan depending on the details surrounding your financial position. This will need to be approved buy Australian Prudential Regulation Authority (APRA) and this type of help is not recommended for long term debt relief.
• Refinancing your home may be a way to secure a lower interest rate from a lender. However it is unfortunate that many home owners will not be able to refinance due to the current credit crisis being felt worldwide.
• As a last resort you may need to sell your house. If it needs to come to do this make sure your try to do it yourself or go directly to an organisation who specialises in buying houses, this way you’ll know that the best effort possible has been put it to achieve the best price. When banks repossess a house they are only interested in getting it sold no matter what the price they fetch for it.

If you are having trouble with your current home finance situation contact us and we will run through with you in depth the options that are available for your individual situation.