Investigations into mortgage refinancing by Australian Securities and Investments Commission, have found vulnerable borrowers, desperate to hold onto their homes, have paid huge refinancing costs and ended up losing everything. This has prompted calls for struggling borrowers to seriously assess their financial situation and consider selling their home if it's become unaffordable.
"Borrowers need to be hard-headed in these situations," said ASIC's acting head of consumer protection, Delia Rickard. "They need to seriously examine their financial position and determine whether their problem is a temporary difficulty in meeting repayments or a more fundamental inability to service the loan.
"If temporary, they may be able to get relief from their existing lender, or fund a new, more appropriate loan. If their problem is more serious, their best option may be to sell the home. Otherwise they can pay thousands of dollars in fees and still end up losing their home."
If borrowers are deciding whether or not to refinance, they need to examine the refinancing charges involved and if the new loan will lower repayments. If refinancing is a more costly and unaffordable option, then selling the property should be considered to avoid losing everything.
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