During the pandemic, lenders assisted home loan borrowers with a home hardship period of up to 6 months. This “holiday period” is longer available but you may still be eligible for mortgage relief. Here are some points worth noting:

  • Most lenders offer a repayment pause for up to 3 months. Falling more than 90 days into arrears (even if the lender agrees to it) could actually cause more issues. At the end of 90 days, the lender could request that the arrears be repaid over a shorter period.
  • Beyond 90 days in arrears, it becomes harder to “capitalize” the amount over the remaining term of your loan. You will need to submit a full capitalization application and meet the lenders credit assessment. A full capitalization assessment is very detailed with copious amounts of documentation.
  • On a positive note, hardship arrangements should not impact your credit score.
  • The new look home loan hardship or holiday period is intended for borrowers going through a temporary period of hardship and require a short breather.

It is important for the borrower to contact their lender in the early stages of any loan arrears, or talk to their finance broker to discuss options.

 

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