The Mortgage and Finance Association of Australia (MFAA) has called for borrowers who find themselves in financial difficulty to work with their lender or broker on finding a solution, rather than waiting until they are in dire straits.

The call comes in response to concerns raised by the welfare and not-for-profit sector in a meeting with Deputy Prime Minister Julia Gillard today that a large number of Australians are feeling the pinch as a result of the economic climate.

“Our advice to borrowers is simple. If you find that the current economic situation is overextending your budget, we urge you to seek mortgage advice. The worst thing a person struggling to repay their mortgage can do is stick their head in the sand and cross their fingers,” said Phil Naylor, CEO of the MFAA.

“This is especially important if your personal financial situation changes. If you or your partner lose your job, if you are planning another addition to your family or if you have cut back on your working hours, it is important to let your lender or broker know.

“Non bank lenders and mortgage brokers that are members of the MFAA are obliged to help you in anyway possible if you are experiencing financial hardship,” said Mr Naylor.

“If you have a home loan administered by a broker, they can canvass home loan options to ensure that the loan you currently have is still suitable to your circumstances. They can also help you to negotiate with your lender to alter your payment options.

“Your lender or broker should be able to help you and will:

• consider varying a borrower’s payment terms to help them to cope with the change in financial circumstances;
• suspend any action to recover any payments due;
• if no default has been already listed, the lender will not list a credit default against the borrower while options are explored; and
• encourage the borrower to make payments they can afford while all options are explored.”

“In fact, if your broker or lender is an MFAA member, they are compelled to look at all of these options under the Code of Practice they sign on to as part of their membership,” said Mr Naylor.

“The trick is to act quickly. The earlier you seek help, the more likely you are to have a positive resolution.”