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MFAA Prosper : Mortgage and Finance Brief 07
A stitch in time: preventing hardship before the loan is written "When someone is experiencing financial difficulty, the sooner you put a plan in place to address it, the more likely it is that they will be able to come back from it," says Financial Cou nsellor Madelene McCarthy. Often, clients will attempt to cover loan payments with a credit card, making a bad situation far worse -- but addressing ar rears immediately and working with your creditors is a win-win situation, she says. McCarthy has been a Financial Counsellor for arou nd 20 years, and cu rrently works at the Mission Australia office in Campbelltow n, in Sydney's south-west. She acknowledges that brokers allied with professional bodies like the MFA A are ethical, well-trained and hold formal qualifications, but says that there are still more opportunities for mortgage brokers to have a positive impact on borrower outcomes. "Mortgage brokers really need to have a greater awareness of potential futu re hazards," she says. McCarthy gives the example of the increasing number of older people who have taken out mortgages with loan ter ms extending beyond their working life. "There are a number of older applicants, in their 40s and 50s, taking out 25 to 30 year loans," she says. "It might be okay for them to take out a longer mortgage if, at the end of their working life, they plan to sell and dow nsize, or if they perhaps consider sharing a house with another adult family member. But before signing up for a loan, they should at least discuss the options." “When someone is experiencing financial difficulty, the sooner you put a plan in place to address it, the more likely it is that they will be able to come back from it.” Lawyer-turned-author Elizabeth Gould took out her first income protection insurance policy over a decade ago, around the time she bought her first home. "I was single and had to have a minor operation, which made me think -- what if I was really sick, how would I make the house payments?" She kept her insurance policies going during several career changes -- from law to marketing to management consulting, and having two children. It all paid off a few years ago when Elizabeth was diagnosed with breast cancer, just six months after she had been brutally assaulted in front of her two children. Although she was able to work during her treatment, and fortunately has now survived breast cancer, the after-effects of cancer treatment (which included a double mastectomy and a total of nine operations) have been debilitating. Elizabeth and her then-husband both worked full-time and both incomes were a critical part of maintaining their mortgage. However Elizabeth had a good income protection policy which was a huge relief when she first learned of her diagnosis. "The insurance meant I didn't have to work if I wasn't able to, it was my choice. I didn't have to worry about losing the house and I could just concentrate on getting well," she says. She has since left her corporate role and now works part-time as a writer, with two books already published. The benefit from her Total Permanent Disablement policy has given her financial security -- which she believes has helped in her recovery. "Knowing that I had insurance in place really reduced the amount of stress I was under at the time, and my life stress overall," she says. Case study: Illness 32 | Mortgage & Finance brief Indepth
Mortgage and Finance Brief 06
Mortgage and Finance Brief 08