Are you thinking of skipping a home-loan repayment? With late fees costing up to $195, you may want to think twice. RateCity looks at what you can do to avoid late mortgage repayment fees.
April 4, 2010
Households are feeling the pressure on their back pocket with an increasing amount of borrowers struggling with their mortgage repayments. The Reserve Bank of Australia (RBA) said there has been a jump in the percentage of late home loan repayments from 0.05 percent to 0.60 percent since January.
The RBA’s figures showed there has been an increase in the number of households that are late with their repayments, with 4000 more households struggling compared to late 2008. In total, approximately 27,000 households are at least three months late in their mortgage repayments which are worth around $116 billion.
Not only do these households have to deal with rate hikes but most are hit with late mortgage payment fees. Damian Smith, RateCity’s CEO said late payment fees can easily be prevented.
“Lenders can charge a fee of up to $195 for not making your mortgage repayment on time and out of the majority (65 percent) of residential home loans that do charge this fee the average cost is $40,” Smith said.
“According to our research, for the 65 percent of households that have outstanding mortgage repayments, if they have been charged the average fee of $40, they have paid a combined $702,000 for every late payment!”
Whether you are currently struggling with your mortgage repayments or you are afraid that another rate hike may tip you over the edge, here are some tips on how your household can avoid being hit with late mortgage repayment fees.
Reduce your debts by consolidation
By consolidating your debts into fewer accounts you will avoid additional late payment fees and interest charges. Balance transfer rates are offered by most credit card providers and several personal loans and home loans also provide introductory rates to help rid your debts.
Compare deals online
You can make a significant difference to your mortgage repayments by comparing deals online. The current average standard variable rate is 6.76 percent for instance, and RateCity’s top rate is 6.14 percent. The difference between the average standard variable rate and RateCity’s top rate could mean an extra $106 per month in repayments or more than $31,000 over a 25-year term.
To avoid the embarrassment of declaring bankruptcy or having your belongings repossessed, help is available to the general public from government and independent organisations. Visit the Australian Securities and Investment Commission website and the Financial Ombudsman Service at for useful information.