If you are a person facing great difficulty in meeting your mortgage commitments, this is not the right time to start worrying about your defaults. If the buyers stick to their bad habits of non-repayment despite having resources, mortgage defaults can seriously hurt them. But the option of asking for help from the lender to get out of the mortgage burden is always open to you.
Though mortgage defaults increase the portfolio of non-performing loans of the banks, yet the lenders are lenient if you have genuine reasons for delaying payments. In order to limit the losses on mortgage defaults, lenders usually foreclose otherwise they are always reluctant to go for it because it always costs them more money. Therefore, they try their best to prevent the default because it is neither in their favour nor in yours.
If you are lagging behind on your mortgage payments, lender takes the action to prevent defaults by chalking out a practical plan to find a better solution against it. However, for that purpose, lenders require you to be honest in disclosing your financial position to them.
When is a lender pleased to help you?
Mostly, the laws of every country favour the buyers who are in mortgage arrears. The law requires lenders to evaluate your situation fairly and take proper measures to fix your mortgage payments and help you in the hour of need. Do not feel shy in discussing and communicating your difficulties with your lender. Always remember, mortgage is a long term agreement and both buyer of the loan and the lender have some common interest in the agreement so as soon as you feel trouble in paying off your mortgage, you should approach the lender and ask for help.
For making the mortgage loan flexible for you, you need to prepare a list of your expenditures and incomes, financial disclosure package highlighting your all assets, liabilities, debts, tax returns and other payments. You are also required to show your pay slip or disclose your earning source as a proof of your employment. You can always communicate the plan you have in your mind to settle mortgage with the lenders after which they take some proper action depending on your situation.
Relaxations to prevent defaults
The lender relaxes the terms and conditions of your mortgage deal depending upon your credibility and debt payment record. If your credit worthiness is good and you are honest in disclosing your financial position, banks may provide following relaxations to help you.
1: Lenders can lower the rate of interest or can charge interest only for a predetermined period. If this is not possible, they can reduce the size of the payments, which gives buyers greater time for loan repayment.
2: Lenders can lower the rate of interest or can charge interest only for a predetermined period. If this is not possible, they can reduce the size of the payments, which gives buyers greater time for loan repayment.
3: Lenders can extend the term of mortgage, which releases the burden of buyers because with that they are required to pay smaller loan payments. They can then easily manage small payments along with other sundry expenses.
If the buyer’s money is stuck somewhere and he is not able to pay the installments on immediate basis, banks can award them a payment holiday. If you go to settle the situation with your bank and you already have arrears, lenders can allow you to pay as much as you can each month without imposition of any fixed amount limit.Lenders can lower the rate of interest or can charge interest only for a predetermined period. If this is not possible, they can reduce the size of the payments, which gives buyers greater time for loan repayment.
Lenders can extend the term of mortgage, which releases the burden of buyers because with that they are required to pay smaller loan payments. They can then easily manage small payments along with other sundry expenses.
If the buyer’s money is stuck somewhere and he is not able to pay the installments on immediate basis, banks can award them a payment holiday. If you go to settle the situation with your bank and you already have arrears, lenders can allow you to pay as much as you can each month without imposition of any fixed amount limit.Lenders can extend the term of mortgage, which releases the burden of buyers because with that they are required to pay smaller loan payments. They can then easily manage small payments along with other sundry expenses.
If the buyer’s money is stuck somewhere and he is not able to pay the installments on immediate basis, banks can award them a payment holiday. If you go to settle the situation with your bank and you already have arrears, lenders can allow you to pay as much as you can each month without imposition of any fixed amount limit.
You can always seek the help of banks if you have the need. However, banks only do this when the buyers are trustworthy, reliable and honest in their dealings. If you are trying to make default intentionally and without having any genuine reason, banks do not even hesitate to repossess your property. Not only you risk your home but also this default as a “priority debt” is reflected in your credit rating, which badly affects your future credit applications.
