A family has been forced to sell their dream NSW home after a brutal battle with their lender. Tim Dodd has been fighting to keep the house he and his wife worked so hard to get, but they’ve been told to put it on the market and find somewhere else to live.
Dodd is one of many people across Australia who have been struggling with their mortgages as a result of economic conditions and interest rate rises. He told Yahoo Finance an intertwined mental health battle had made the last few months soul-destroying.
“You feel like you’re in a dark hole and you can’t climb out of it, or like a ship at sea with no rudder and no sail and no way out,” the father-of-three said.
Dodd is not alone. A poll of more than 2,700 Yahoo Finance readers found 24 per cent feared they would have to sell their home if there was not an interest rate cut this year.
A separate survey of more than 7,500 people found more than half of respondents (52 per cent) are using more than 40 per cent of their salary to pay their mortgage, plunging them into “mortgage stress”.
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Dad-of-three’s harrowing decline after ‘dream’ buy
Tim, his wife and three daughters moved to Australia from the UK in 2007 and had big hopes for the future.
“We had this Australian dream of starting a business and buying a house,” he told Yahoo Finance.
He started three barber shops, which his wife helped run, and put all his spare time into other jobs to help build up their savings.
“I went to work in the mines and drove trucks as well as a labourer at weekends … whatever it took to achieve the Australian dream of owning your own home.”
But working around the clock and being away from his family took its toll and Dodd suffered his first panic attack in 2012.
The debilitating and intense bout of anxiety “changed him”. It is something he has been trying to keep at bay ever since.
In 2017, the Dodd family achieved their dream and bought a home in Coffs Harbour.
But, like many people and business owners, the pandemic hit hard and he had to shut down until restrictions eased.
Banks across the country allowed some customers who were unable to earn an income to pause their repayments and interest payments.
Dodd’s mental health took a sharp turn and he was hospitalised during lockdown.
The family refinanced their mortgage in April 2021.
Nearly a year later, the Reserve Bank of Australia (RBA) kicked off a months-long interest rate rise campaign. From May 2022 to November 2023, the RBA increased the official cash rate more than a dozen times and it’s sat at the 13-year high of 4.35 per cent since late last year.
Dodd’s mortgage repayments skyrocketed and he was forced to work up to 20 hours a day, six days a week at his barbershop. He also built an online business to try and take pressure off.
In March last year, Dodd said he reached breaking point and sought a six-month hardship break from his lender, La Trobe Financial.
Dodd, who also has an autoimmune disease, was not coping with the long-hours and said he needed to put his mental health first.
He asked the bank to freeze his repayments and interest, along with blocking any other fees or penalties.
Dodd was told his repayments could be frozen, but all the other payments would continue as normal.
The 49-year-old tried to take his case to the Australian Financial Complaints Authority (AFCA), but they ruled in La Trobe’s favour as the bank wasn’t breaking any rules.
“When I came out of my hardship period, I came out worse than when I went in,” he explained.
Before the hardship was granted, the family was paying roughly $700 a week for the mortgage. After, it jumped to $1,150 per week due to the interest and late payment fees compounding.
He begged for another round of hardship and was placed on a probation period for six months, which gave him some mortgage relief.
During this period, his mother became incredibly sick and he flew back to the UK to see her.
On his way back to Australia, he caught COVID-19 and he said the symptoms were so bad that he had to go to hospital. That took him out of work for another month.
“We sent them emails saying, ‘Guys, listen, can you please take this into account, not only have I got to take time more time off, I’ve got to build my clientele back up’,” he told Yahoo Finance.
“Each day is torture because of the anxiety and the breakdown I had.”
Dodd defaulted during his probation period so the bank “took action”, repossessing his house.
The news sent Tim into a nervous breakdown and he was checked into a psychiatric hospital.
Savage cycle of mental health and mortgage stress
Dodd was told to contact the National Debt Helpline (NDH) to manage his stress, anxiety and depression.
National Debt Helpline co-CEO Peter Gartlan told Yahoo Finance the number of calls they’ve received across the country had taken a concerning jump, with more scared Australians opening up about suicidal ideation.
He said interest rate rises were pushing even those on good wages to struggle under the weight of their loans.
“That cohort of people are in a heightened state of anxiety because they’re experiencing something that they haven’t experienced before,” Gartlan said.
New analysis by AMP also recently found that just one in three working Aussies felt financially secure.
There has been a sharp rise in stress for workers earning between $100,000 and $150,000, with nearly a quarter of Aussies in this bracket reporting they were “severely” or “moderately” financially stressed.
This was up 150 per cent in the space of two years and nearly triple from 2020.
Mortgage repayments have skyrocketed by about $1,562 per month on a $600,000 loan since the central bank started hiking rates two years ago.
Commonwealth Bank revealed this week it offered 132,000 tailored harship payment arrangements in just the last year.
‘Cookie cutter’ approach to hardship ‘needs to end’
The NDH has called on banks to develop a more compassionate approach to hardship after the Australian Securities and Investments Commission (ASIC) released a scathing report on how struggling clients were managed.
ASIC’s report said agreements were too stringent and established a “cookie cutter” system that didn’t take individual needs and situations into account.
The research – which included big names like Commonwealth Bank (CBA), NAB, and Macquarie Bank – discovered that 40 per cent of customers who received hardship assistance through reduction or deferral of payments, fell into arrears right after the assistance period ended.
Banks were found to have made accessing financial assistance so difficult that more than one in three (35 per cent) of Aussies dropped out of the application process at least once.
The regulator said that in the worst cases, lenders straight up “ignored” hardship notices that effectively “abandoned” customers at their lowest.
During the last quarter of 2023, there was a 54 per cent increase in hardship notices for home loans compared to a year earlier.
“Lenders were not doing enough to help people who found themselves in financial hardship,” ASIC Commissioner Alan Kirkland explained to Yahoo Finance.
“That included not communicating with people about their rights to request assistance, not being clear to people about the implications of entering a period of hardship assistance, including whether they’d end up incurring additional interest, and it included not communicating clearly with people about their options at the end of a period of hardship assistance.”
La Trobe Financial was not one of the lenders included in ASIC’s investigation.
11th hour fight to keep the dream alive
Dodd was told by La Trobe Financial that he would have to put his house on the market by October 11.
After making an appeal to Treasurer Jim Chalmers, Dodd was told he had one more avenue to pursue.
Tim Baird, senior executive leader at the Treasury, said he was “free to pursue your dispute in another forum, such as a court”.
He sent a final plea to La Trobe Financial on October 11.
La Trobe said it is currently reviewing his request.
Yahoo Finance has contacted the lender for comment.
Dodd is scared for his future and how he’ll be able to get another roof over his family’s head.
“Let me keep the house I’ve worked so hard for,” he told Yahoo Finance. “At 49 years old, it might take me another 10 years to get back into the housing market.”
What can you do if you’re struggling to pay for your mortgage?
If you are struggling with your mortgage you can approach your lender to request payments, interest and other fees to be held.
But it is up to each lender to determine how it will be handled.
Kirkland said financial institutions should do more to help Australians know what support is available and be proactive in offering support.
“That includes identifying people that might be in trouble and communicating with them in tailored ways,” he told Yahoo Finance.
“Lenders are in the best position to understand whether somebody might be struggling, and they should be doing what they can to make sure that those people know that help is available.”
According to ASIC’s report, only 6 per cent of completed hardship requests were declined. Around a quarter were withdrawn or declined due to the customer not providing the requested information.
If you are struggling with debt visit the National Debt Helpline at ndh.org.au or call 1800 007 007 to speak with a free and independent financial counsellor.
If you are struggling with your mental health, here is a list of services that are freely available in Australia:
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