MORTGAGE REFINANCING
Peter's was working as a Science Teacher for 20 years. While it wasn't an enormous salary, together with his wife Susan's part time wage it was enough to put 2 kids through school and cover the mortgage repayments. Together they'd paid of a large amount of their home loan.
Peter unexpectedly fell ill. After the sick leave ran out, he used credit cards to pay the home loan, help the kids at Uni and cover the cost of living. After 8 months he recovered but has been left with $35, 000 in credit card debt.
After the mortgage and the bills he had to catch up on he still has to pay more than $700 per month on his credit cards to cover the minimum payments. Peter and Susan's Mortgage Refinance allowed them to consolidate their Credit Card Debt into the mortgage the total repayments reduced by $700 per month!!!! The reduction in repayments has given Peter and Susan back their lifestyle.
Mortgage Stress
Many Australians are experiencing mortgage stress. Interest rates have risen significantly and are now creating a large amount of stress. Much of the stress comes from having other debts to repay on top of the mortgage. Credit Card, Personal Loan and Car Loan repayments are using a lot of the money that could be used to make mortgage repayments. Rearranging your debts may be able improve your cash flow. One way of doing this is through Mortgage Refinancing.
Mortgage Refinancing
Mortgage Refinancing works by using equity in a home to consolidate debt. Many Australians have accumulated a large amount of equity in their property as a result of property prices soaring. Provided your total debt is less than the value of your property you may be in a strong position for debt consolidation.
How it helps.
Mortgages are a unique kind of debt. Due to the stability of property prices in Australia the interest rates compared to other types of debt are comparatively low. Credit Cards on average carry an interest rate of 18.5% compared to mortgage rates of around 8.75%.
Due to the fact that property appreciates (increases in value) rather than depreciates (goes down in value) lenders will take the loan out over a much longer period of time, up to 30 years, or will be prepared to accept payments of only the interest (interest only loans).
With a much longer term and a much lower interest rates mean that your total repayments will go down often by a large amount.
Non-Conforming Loans (Bad Credit Mortgages)
Specialist Lenders or Bad Credit Lenders offer mortgages to people who don't conform to mainstream lenders criteria (i.e. non-conforming). This can because of problems with your credit history (defaults, judgements or even a large number of enquiries), self –employment, casual employment, seasonal employment, bankruptcy.
The interest rates with bad credit lenders depend on the severity of the problems with your credit history and the amount you borrow, so it may be higher. It is generally expected that you will commit to a minimum term of 2-4 years. After this period of time your credit history will generally be clear (credit repair or rehabilitation) and you can move to a mainstream lender with lower interest rates.
The benefit of this type of loan is that if you're consolidating debt the monthly repayment may go down significantly to what you are currently repaying. If you're struggling to make your repayments this maybe a solution that would enable you to both hold onto your property and improve your quality of life.
Bad Credit Mortgages can be complex. If you feel that this might be a solution to your financial problems contact Debt Helpline for a free consultation. We can identify what interest rate you would be eligible for and what the repayments would be.