Now is the time to contact a mortgage adviser

More than 80% of homeowners contacting The Lending Team, for example, and other advisers are on 2-4% fixed term interest rates. With renewal dates approaching, they’re likely to refix at 6-7%. On a $800k mortgage, that’s an estimated extra $400 per week or $1600 a month and for many families, this is daunting.

The Lending Team director and mortgage adviser Neville Modlin, who has 30 years’ experience in the finance industry, says the industry hasn’t seen stress like this since the GFC in 2008.

“Homeowners are more overwhelmed and on-the-edge financially than ever before. Many don’t know where to turn, but they do have options,” he says.

Qualified advice is key

“What’s really concerning is the number of people who don't know that advisers can help with the refixing process; many homeowners are unaware there are options available to help during this tough time.”

He says households don't have to wait for their current term to end to kick discussions off. “Early discussions are crucial to give homeowners time to explore all options on the table.

“For those facing hardship or lying awake worrying about meeting increasing repayments, there are things you can do.”

Mortgage restructure

An adviser can review a homeowner’s existing mortgage structure and explore what adjustments can be made to reduce repayments. Key areas for discussion include:

• floating vs fixed rates;
• extending the loan term;
• interest only terms; and
• refinancing.

Refinancing an existing loan to a new provider also gives the option to restructure.

“At first glance, interest rates are similar between the main banks, however a cash contribution offer is an attractive incentive to move,” says Modlin.

“Most banks are offering one per cent cash and some up to $25,000 – making a massive difference to homeowners. There are, however, potential costs to refinancing, so an adviser will also take those into consideration when this is discussed.”

The bank’s hardship team

Banks have dedicated hardship teams available to assist, and advisers can play an intermediary role for overwhelmed customers.

These teams are dedicated to assessing options such as a personalised repayment plan on a case-by-case basis, Modlin says.

Key advice to the worried

“Homeowners need to have an understanding of their financial position now, not later. Many spend too long on the what-ifs; however, it’s all speculation until they’ve had a mortgage adviser assess where they are. From there it's possible to come up with a workable solution,” he says.