Missed A Mortgage Payment? Here’s What You Need to Know

Missed a mortgage payment? It’s just one, so it’s probably fine… or is it?

If you’ve missed a mortgage payment, it’s important to act quickly. Your lender is likely to charge a late payment penalty, which will be added to your loan balance. If you’ve missed multiple payments or it's been more than 30 days since your last payment, your lender may report the missed payment to the Credit Bureaus. This can lower your credit score and make it harder to secure finance in the future.

Here’s what you really need to understand:

Your loan agreement with the bank is a legally binding document, which means if you break it (such as not making your repayments on time), the lender has the right to issue a Property Law Act notice which is a formal demand for payment. 

If this is not paid in the set amount of time, the lender can then begin the process of selling the property through a mortgagee sale. If your home is sold via mortgagee sale, this will make it much harder to borrow for a home again in the future.

What to do if you’ve missed a payment:

If you think you might miss a payment or have already missed one, the best thing to do is contact your lender as soon as possible. Let them know the reason for the missed payment and make the payment as soon as you can. If you're unable to, lenders are often open to discussing a revised payment plan.

This might look like a few extra days to make a payment without a late payment penalty, or a repayment plan that spreads the missed repayment out over a few future payments. If you're facing significant difficulty, there are alternatives like extending your loan term or taking a mortgage holiday, but these options have their own consequences, so it’s wise to consult your adviser first.

Remember, lenders want to help.

It’s important to note that lenders want to work with you. They want to see you keep your home and continue to repay your mortgage, so most will be happy to work something out. There is a lot involved for a lender to force a mortgagee sale, so this isn’t something that they pursue lightly. 

Need support?

If you are struggling right now to make your mortgage payments, then reach out to us. We can review your current loan and repayment setup to see if any adjustments can be made to ease your financial burden.

You can also consider reaching out to MoneyTalks, a free NZ-based budgeting advice service. Their team can help you manage your money better, offering guidance on budgeting and cost-cutting to help you keep more money in your pocket.