What If I Lose My Job As A Home Owner Or Property Investor?

Losing your job can be a shocking event, and you can expect significant lifestyle changes. However, there are steps you can take to find support and manage your money.

 

When you do not have enough emergency savings to manage your mortgage while you are out of work, you can consult your lender. Explain the circumstances to them and request temporary relief. Your lender may allow to let you to defer few home loan repayments.

However, keep in mind this may be more expensive if you have not established strong repayment history or recently signed a loan.

Get Financial Help If You Need It

Rick Nieuwenhoven, Chief Executive Officer at the Nieuvision Group & Professionals Modbury, shares his two cents worth on. Click here to access his video.

How to cover yourself in unexpected circumstances like job loss?

It is a great question; I say it is a fear-based question because sometimes I see potential investors or renewing investors are more fearful of the unknown than thinking logically.

So, what I am talking about here is, let’s assume that you are around the age of 40, maybe you have been working for 20 years. Most people come to me with this question.

And, I ask the question back – how many times have you lost your job?

At least 80% would say, “Oh, well, I have never lost my job,” right? That means this question is redundant for 80% of people.

The other 20%, I would say 95% of those people who would answer the question back – well, ok, you lost your job – how quickly did you get another one?

They would say, “Oh, almost straight away.”

Most people are highly employable once we get to that age, but what can we do to protect ourselves?

The most fundamentally important thing is not overextending ourselves. If we do hit financial difficulty through unemployment, the last thing we want is:

# High credit card debt

      # High personal loan debt

# High car loan debt

# Plus a mortgage

# Plus school fees

To a point, we cannot service it all.

And, if we are in that position, what do we do?

We call the financial providers quickly, explain the situation to them and ask for a pause on those payments for up to three months. They legally have to do that for you.

Four Options To Reduce Or Pause Your Home Loan Repayments

Many options are accessible for pausing your home loan repayments. Some of these may be a little more challenging, while others can be pretty simple.

Option 1: Temporary Mortgage Payment Reduction

Suppose your salary has been temporarily reduced, for instance, one spouse losing a job and leaving you with one income. In that case, you may be qualified for a temporary reduction in your mortgage payments.

 

In such circumstances, your lender can give you an option to provide an amount of money you think you can conveniently repay without putting you into financial difficulty.

Option 2: Apply For Hardship Variation

Due to temporary financial stress, if you cannot keep up with your home loan repayments, you can try reaching out to your lender and apply for a hardship variation. If your lender allows, they will pause your loan repayments and combine all interest charges on your mortgage to the end of the loan term. 

Option 3: Rearrange Payments To Interest-Only

If your home loan has a principal and interest repayments, you might change it to interest-only repayments. This will subdue your monthly repayments in the short term because you only pay the interest charged on your mortgage. 

Option 4: Explore Redraw Facility

If you have been making additional repayments off your mortgage balance, you may have funds available. It is known as a “redraw facility.”

Instead of withdrawing these, you may use them to substitute making loan repayments. Keep in mind; not all mortgages offer a redraw facility.

Consult Financial Counsellor Today

If you need a helping hand to manage your finances, have a no-obligation consultation with our financial counsellor.

We can help review your debts and budget and find the most efficient ways to improve your situation.

Check to see whether you hold income protection externally or within your superannuation account.

Call us on 08 8263 4009 or submit an online enquiry and our specialists will call you.

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