 New measures to help those in financial stress
Households with mortgages of more than $500,000 will soon be able to legally request changes to their credit contract.
This is welcome news to all homeowners hit hard by the global financial crisis, and will help ease the strain for those Australians who join the unemployment line.
The plan is to outlined today and is hoped to make it easier for consumers with large mortgages to make changes to mortgage repayments on the grounds of financial hardship.
Superannuation and Corporate Law Minister Nick Sherry says the current rules effectively excludes a number of home owners where values may be high as loans must be less than about $312,400 to make a claim.
"We don't believe that either the current amount or the way it's calculated is in the best interests of hard-working families, so we're increasing the threshold to $500,000. We're also putting in place a new, simple and clear way of adjusting the threshold upwards in future, if we need to."
The limit will be amended to start taking effect after November 1 when the National Consumer Credit Protection Act is expected to commence.
Consumer advocacy group Choice policy director Gordon Renouf is pleased with the new rate saying it is more realistic and it now includes a number of households with average incomes who may be in financial difficulty.
Borrowers are to guaranteed free legal representation through the Financial Ombudsman Service if their lender refuses to grant hardship assistance and they wish to challenge the decision.
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