Last Updated on January 4, 2021
Losing a job is, in itself, a very unsettling feeling. It is made disastrous when you have a mortgage that you need to service. If not well cared for, the situation can turn bad very fast.
One only feels safe under their roof. The thought of losing your home and being kicked out while you don’t have an alternative source of income is in itself able to drop you straight to depression. But thanks to the measures put forward by different players in the industry, such occurrences are much managed by putting down some rules which may come in handy for you.
Lenders also anticipate these cases, and once in a while, they are expected to work towards helping the situation. However, you will eventually be required to make full payment on the mortgage. There are some measures the lender can take to improve the situation, and you can equally play a few cards to alleviate the situation.
Therefore, this article discusses what to do with your mortgage, even after losing your primary source of income.
Budget with the available funds
During hard times like these, you will need to have a smart plan on the expenditure since you don’t know where next you will have an income. With the small amount of cash you have and that you had earlier saved and whatever you raised from your job redundancy, needs to be spent well. From the same pool of money, you will be using it to settle the monthly debt installments.
Therefore, you need to separate those bills into the ones which you can’t do without, and such bills are utility bills, taxes, debts on the house, etc. These are highly prioritized debts which you must service lest you get into serious trouble.
The other will contain those bills, which you must serve them, but you can live without them. They include unsecured loans, bank overdrafts, etc.
With the second group, the lender may take up arms with you in court but only for the jury to order you to pay in line with your current income. And since you don’t have any, maybe you will have a break in that area.
However, it would be best if you walked the talk on your spending too. Cut your expenditure on less essential commodities and eliminate nonsensical products from your budget. Keep your cost as low as possible to have extra cash going into loan repayment.
Seek payment adjustments
Exploring alternative payment options is always a viable card to choose from on the table. For example, people who want to phase their loans out fast may seek the lender’s approval to pay an extra amount on the installments to have short loan payment terms. You can revert this decision and, even much better, get the period to be elongated so that you make lesser payments monthly.
You can do this until your financial situation is alleviated, then you can return to your original agreement. This move, however, has its shortcomings. For instance, with card repayment and expenditure, whereas you are cutting on spending, the credit card company is likely to report lesser and lesser activity on your card, showing slowing spending, which affects your credit rating considerably.
This may also be the case with other lenders. Therefore, reductions in payments hurt credit ratings.
Consider hardship programs
Your Credit Card Company or lender will not advertise this outrightly. So, it would help if you looked for indicators to show you that such programs do exist. You are likely to see contact with directions of difficulty or anything that shows you that hardship programs are offered.
Such applications will help you, for instance, your card is likely to be temporarily frozen so that no interest is being charged. However, this move is expected to affect your credit score. So, it would be best if you asked how the company reports hardships to the reference bureaus.
Hardship programs also extend to a mortgage payment. In this case, your options are likely to be credit consolidation, forbearance, and renting away your mortgaged home. Consolidating credit involves taking out a new loan, which is used combined with all the old debts.
The new loan will have a more extended repayment period as well as better terms with regards to rates of interest.
Just like loan refinancing, you have an option to forbear your loan. Just talk to your lender if this option works for you. Or, you can explore the idea of creating a more favorable repayment plan. However, the deal goes; if you get to freeze pay for some time to pick up the momentum later with a higher package to make up for the skipped months will help your financial situation unimaginably.
Furthermore, you might consider renting away your house to earn money to keep up regular mortgage installments. It’s an idea worth considering; however, it is not so popular among the majority of people.
The government is open to assistive programs for a variety of people from students, public servants, those working in the private sector. Depending on your profession, the government can link you to a plan that aims to assist you in credit facilitation.
Examples include; student loan forgiveness plans, government-income based repayment program, federal loan deferment plan, student aid, home modification program for home-owners, etc.
The Bottom Line
A mortgage is a house loan. In simple terms, this is finance, which enables you to have a roof on your head. You will not want to lose this asset.
Lenders offer this financing with an understanding that you will make monthly installments of some amount set between the two parties, and they expect this to be honored. Losing your job does not help in this endeavor. That’s why you need to be extra keen on it. Use the above illustrations and examples to find yourself a safe niche and survive this tough period.
Let your lender know you have no employment and let them present the options you might be having on the table; foreclosure not being one of them. If you need a loan, and you want to compare the rates online https://www.loanadvisor.sg can be a great help.