Early action saves your home

Fiscally pressured property owners are losing their homes in bank fire sales because they leave it too late to fight back. Terralink figures show April mortgagee sales reached a new peak of 251, up from 201 in March and 90 a year ago.

The best time to talk to the bank is before you default on a payment. Banks have an incentive to work with a homeowner to prevent a forced sale, says financial adviser Kathy Jarrett, because it's more expensive to get rid of them.

Lawyer Alistair Hall says options include negotiating a mortgage "holiday," switching to interest-only or capitalising interest onto the principle. Changing payment terms can also give a window to sell privately, securing a better price.

People who borrowed a high proportion of their property's value during the height of the last property boom have the fewest options, says mortgage broker Kris Pedersen.

"The market has dropped so effectively these cases are 110 per cent geared. The agents take their commission, and often they're six months in arrears by the time of the mortgagee auction, so it could take 120 per cent of the property's worth to clear the debts."

To read the full NZ Herald article, click here

Posted: 27 Jul 2009

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