A perfect economical storm has seen more people in the South West seek legal help for mortgage stress, with experts warning homeowners not to ignore financial problems.
Over the last five years, there were more than 50 homeowners in the South West who sought legal advice because they struggled to make mortgage repayments and defaulted on a home loan.
Forty-eight per cent of cases were from the greater Bunbury region, 18 per cent of cases were recorded in Collie, 9 per cent from Margaret River and 2 per cent from Busselton.
Legal Aid WA director of civil law Justin Stevenson said the problem mostly occurred when interest only periods ended on mortgages and people went onto interest plus principal repayments.
Mr Stevenson said people ran into financial trouble when the principal and interest amount was quite high in comparison to what they paid during interest only.
"And more than what interest and principal would have been if people had paid that from the beginning of the loan," he said.
Mortgage stress was also intensified for people who bought their home at peak prices during the property boom.
"If people bought property at times when prices were higher, and as most people would know property prices across the state have dropped and continue to decline, there is no light at the end of the tunnel."
Mr Stevenson said people who tried to refinance their mortgage through another lender as they moved out of an interest only period would find that banks were now stricter following the Banking Royal Commission.
"Banks are now very strict on how they consider applications for finance and there is also a credit squeeze."
Mortgage stress was not restricted to homeowners but also investors who faced higher interest rates than owner-occupied home loans.
Mr Stevenson said his biggest piece of advice was not to ignore the problem if people struggled to make their mortgage repayments and deal with the issue as soon as possible.
"People should get some free legal advice or see a financial counsellor and face the issue head on," he said.
"If there is hardship because a person lost their job, or has health problems, or is facing a crisis then it may be possible to make a financial hardship application."
Mr Stevenson said in some situations banks might agree for customers in financial hardship to pay less for a period of time or pause payments.
Others could lose the sale of their home if a bank started proceedings in the Supreme Court to issue a writ for mortgage repossession.
