What Causes Mortgage Arrears?
A mortgage arrears generally occurs as
the result of an unexpected change to a person's professional or personal life.
A change in circumstances, such as the loss of employment, a death or illness
in the family, or a separation/divorce can cause borrowers to be unable to
repay their debts as they had in the past. The financial stress of falling
behind on repayments only compounds the stress of such events making it
important to get the proper advice, help and support.
Such unexpected, and often unplanned for,
events can have a greater impact than you may think. For example, the serious
illness of a spouse or partner could easily result in the loss of
three-quarters of the household income, as one partner reduces work hours to
care for the other. Such a reduction of income would quickly put any family
into financial difficulty. With home, car and credit card debts, the sudden and
unexpected loss of income can have devastating effects.
It can be hard work to get back on track
financially in the instance of a mortgage or other loan falling into arrears
but it certainly isn't impossible. Looking at the above example more closely,
the different repayments due such as Home Loan ($1400 per calendar month), two
car loans ($400 pcm each), and three credit cards ($600 pcm) could cause
serious financial stress if repayments were to fall behind.
The above example is based on everyday
situations that families across Australia
face but there is help available. A debt consolidation mortgage or bad credit
loan could provide help for people who find themselves with an unexpected
mortgage or loan arrears.
See the 'What is a home loan arrears?'
FAQ for more information.
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