Managing your Mortgage

Struggling to Keep Up With Your Mortgage Repayments?

When facing financial challenges, keeping up with mortgage payments can become difficult. Your home loan is most likely your biggest regular expense, and if you’re struggling with your repayments, it’s good to know what your options are.

Extend your loan term

Extending your loan term up to a maximum of 30 years can reduce repayments however, this could mean that you will end up paying more interest over the life of the loan.

Reduce Repayments for a Time

If your regular repayments are currently higher than the minimum required, you could reduce them to your minimum. However, you will pay more interest over time and it will take you longer to pay off the unpaid balance.

Interest-Only Payments

You can also set up your home loan as an interest only loan but only for a specific period. With an interest only loan, you are repaying only the interest amount as it accrues on your outstanding balance, and none of the principal.

An interest only loan will cost you more interest in the long term than a table or reducing loan because you're not paying off any of the principal during the interest only period.

Because you still have to repay your loan before your maturity date, your repayment amounts after the interest only period ends will be higher. Interest only loans are only available on a short term basis to ensure you can still pay down the loan before your maturity date.

Mortgage Repayment Holiday

While mortgage repayment holidays are an option to alleviate immediate financial hardship, they should be used as a last resort. Interest will continue to accumulate during the ‘holiday’ period, and the term of the loan will usually remain the same.

It is vital that you speak with your bank immediately if you are experiencing financial difficulties. The sooner you reach out for help, the more effective alternative solutions will be.

Considering Your Options?

Financial difficulties can be stressful, but there are often options available to help ease the pressure. Whether you're considering a mortgage repayment holiday, interest-only payments, refinancing, or another arrangement with your lender, it is important to understand the implications before making a decision.

If you're experiencing difficulties meeting your mortgage repayments and would like to discuss the options available to you, contact the team for professional advice tailored to your circumstances.

Braden Matson

Email: braden@smlaw.net.nz
Phone: 09 279 8351 ext 204

Breanna Fuller

Email: breanna@smlaw.net.nz
Phone: 09 279 8351 ext 212