Buying a house should never be a decision to take lightly, especially for first time buyers that may be keen to own their own property. The excitement of making a purchase can often be overwhelming and this initial excitement has led to thousands of people signing up for mortgages that have ended up causing a financial strain.
Although most leading banks will aspire to undertake a variety of checks that can help to reassure them that their customer will be able to meet their payments, there’s simply no guarantee in life. There are plenty of unforeseen circumstances that can lead to financial struggles and here’s a closer look at some of the most common, as well as viable solutions.
Losing a job and being made redundant
Australia has one of the most stable economies in the world, but as different businesses experience a range of successes and failures, there’s no fool-proof way to ensure that a career will be available into the future. A bank will rely on the income from this job in order to guarantee their repayments, so if a borrower is made redundant, or if their business goes under – they may struggle to keep up with their costs.
There are several options open to those in this situation, from the ability to be declared bankrupt all the way to seeking financial assistance from support agencies. As long as the bank can continue to receive a return on their investment, the concern of repossession can be fairly minimal.
A death in the family
This can be a very hard time for any family member to have to come to terms with. If the person that has died was in charge of repaying the mortgage, then all residents may soon find themselves struggling to keep up. Many banks are understanding of these kinds of events and they would much prefer to look for alternate measures to get their money back under unfortunate circumstances.
To safeguard a family it is well worth investing in life insurance – to ensure that if the person in charge of payments does die, their cover will be able to cater to the costs of the home (or pay for the property in its entirety). There are also banks that will only provide loans to those that have ample coverage to begin with.
For those that rush into agreements without much thought for the future, it’s not uncommon for financial difficulties to arise. In these events, a good lender will do their best to accommodate any struggles in a way that benefits their customer, whilst guaranteeing them a return. This can be as simple to fix as requesting a longer period of repayment.
Alternatively, a bank may be willing to allow a customer to negate their repayments for a couple of months, in favour of requiring more interest in the near future. This can be ideal for those that will be temporarily out of work, or for people that have suffered an injury and may not be able to meet the full sum each month on their disability allowance.