Conveyancing 05 September 2022

Interest rates are on the rise

What are my rights?

With interest rates on the rise, it is inevitable it will put a strain on a lot of households. What are your options and rights if you cannot meet your mortgage repayments?

It is okay to ask for help.  Contact your bank and try to negotiate your current loan terms or contact a mortgage broker to see if you can refinance your property for a lesser interest rate to reduce your loan repayments.  This is also recommended to attend to earlier rather than later.

Under Section 76 of the Transfer of Land Act 1958 any mortgage that has been in default for a period up to thirty (30) days provides the right for a bank to serve a Notice of Default.

What do I do if the bank has issued me a Default Notice?

Under Section 77 of the Transfer of Land Act 1958, a Default Notice states that if a Notice of Default is not remedied after one (1) month of issuing the Bank can exercise their power to sell the property.  The Notice of Default may come directly from your bank or from their legal representative.  The demand will be issued to your last known postal address therefore it is crucial to keep in touch with your bank.

Your options once you have been issued a letter of demand are:

  1. negotiate your current loan terms and pay the outstanding default;
  2. speak to your bank to see if you available to claim financial hardship;
  3. refinance with new lender for a smaller interest rate that maybe more sustainable; or
  4. sell your property on your own terms.

What are my rights if the bank has taken possession of my property?

It’s a common misconception that you can purchase repossessed properties for ‘cheap’.  This is not true.   Under Section 76 of the Transfer of Land Act 1958 once the Bank has taken possession of a property the bank is required to act in good faith for not only to obtain payment for their outstanding debt but in good faith for yourself the borrower.

Due to this the banks are bound by Section 76 of the Transfer of Land Act 1958 to sell the property at market value.  In this Section of the Act it states that the best procedure to obtain a true understanding of a properties wealth is to sell by public auction.  In most instances the banks will also obtain sworn valuations to set their reserve prices and  market these properties for four (4) weeks prior to the auction.

What happens if the property sells more than what is owed under my mortgage?

The bank is only entitled to what is owed under the mortgage and all added cost involved to prepare the property for settlement.

Things to remember:

  1. if the property is left in disrepair the cost to clean and fix the property in order to bring the property back to a marketable state will be added to the mortgage.
  2. any chattels left at the property is required to be collect within the designated time frame disclosed in your memorandum of common provisions normally up to 30 days. Any goods left after this notice to collect period will be either sold (if of value) and the funds credited to the mortgage, or the goods will be disposed of.
  3. if you are not contactable after the sale of the property by the bank and there is money available to you if these are funds are not claimed they are paid into unclaimed monies with the State Revenue Office.

Please keep in mind these may be hard times but options are always available to you, and we suggest keeping regular contact with your bank about your situation.

Melaine Hudson.
Melaine Hudson Conveyancing Manager Property & Development View profile
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