If you’ve missed your loan repayment make sure that the first thing you do is “Don’t panic.”  Just because you’ve missed your repayment, it isn’t the end of the world.

Once you’ve gotten over the initial panic moment and exclaimed “oh crap, i’ve missed a payment”, the next thing to do is to assess the reason why the payment has been missed.  This is because your lender will want to know why it was missed and how you’ll make it up.

Check your loan contract

Some variable rate mortgage loans allow you to miss some repayments provided you have previously made additional payments or payments in excess of your regular minimum principal repayment.  However, it’s important to note that not all lenders will allow for this to happen.

Assess why you missed the repayment

There’s usually a reason why a scheduled loan repayment was missed and it’s important to find that reason so you can address it.  If you are fully aware of why it’s happened then it’s going to be up to you to try to fix it.

Some of the most common reasons for a missed loan repayment (especially for a home loan) is because you didn’t have enough money in the account that the lender is going to take the money from (the direct debit account).

Not sure what a direct debit is? Check out how you can make loan repayments?

Other reasons that could occur include some sort of banking error or for an incorrect bank account.  An incorrect bank account can happen when you change banks or accounts, but forget to tell your lender about it.

Ring your lender

Being proactive about missing a repayment goes a long way to show the lender that your not trying to hide.  Trying to hide can be a clear sign that you can’t actually afford your loan repayment and are trying to avoid the issue.

Once you’ve made contact with your lender, explain the situation and they will be able to let you know what to do get back on track.

Getting into trouble and experiencing hardship?

This is something that can occur to all of us at some stage in our lives.  If you’re experiencing hardship, you have some rights by law to help you protect your home.  Every lender will have a set of procedures to follow if you are having troubles affording your home loan and it’s important to follow these steps and get on the front foot.

Don’t be embarrassed, scared or shy about it. Just make the phone call and get onto it. It could save you a lot of stress later on if the lender tries to sell your house because you’ve been avoiding them!

If you’re in trouble, it’s also a good idea to ring the relevant financial services ombudsman and if needed engage the services of legal aid or other free legal counsel who can help you out with the process.

ASIC’s free MoneySmart website has a great resource to help if you find yourself in need of financial counselling. You can read more about that here.