Beleaguered home lender RAMS has temporarily averted a disastrous collapse after Westpac bought its brand and franchise network for $140m. But what will happen to customers if it does eventually go bust?
 
While there hasn't been a case of a major lender going under in Australia, failures are not uncommon nor limited to just a few countries. This means any borrower is exposed to the real possibility of their lender collapsing. Knowing your rights and the essential steps you need to take when this seemingly unthinkable event happens will help you deal with the situation.

In the latest issue of Your Mortgage, currently on sale, we reported in detail how you could protect yourself and your property if your lender goes under.

A spokeswoman for Consumer Affairs Victoria said that if your mortgage provider is going into administration or liquidation, your mortgage can't be called up - that is, they can't ask you to pay the remainder of your loan in full.

"Consumers with existing mortgages are obliged to continue their repayments according to their contracts. If your home loan has a redraw facility, it may not be available should your company enter administration or liquidation. This is because there may be no funds for consumers to redraw against.

"Should your home loan have this feature, contact the administrator or liquidator for further advice."

The important thing to remember is to keep making your repayments, regardless of who owns your loan. This way, you can ensure that your home isn't at risk.
Get out your mortgage contract and study the fine print, or take it to a solicitor if the lender changes. Beware of extra fees or other practices. The lender cannot enforce anything contrary to what the contract states.

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