Getting Mortgage Advice
The majority of people will do everything in their power to ensure that they are able to repay what they borrow from a bank (plus interest). Most lenders will enforce strict terms and conditions to guarantee that they get their cash back – but what about those of you that simply can’t afford to pay back what you were given?
The truth about bank policies
When entering in to a contract with a bank, it will be your responsibility to be as open and honest about your earnings and financial situation as possible. It will then be the bank’s responsibility to perform a variety of checks to make sure that you are in a position to repay what you intend to borrow. This is why terms are clearly defined at the beginning of an agreement.
If you want to borrow $200,000, but can only afford to repay $150,000 based on your current financial situation, then a bank will only permit what you can afford.
What about times where situations change?
Although you may be approved for a loan, there’s no definitive way to guarantee that you will still be able to pay back what you borrow in the future. There are always risk factors and these can include being made redundant, falling ill, or even dying. Some banks will even ask for information relating to life insurance policies; just to reassure them that if the borrower dies, their insurance will be able to cover the outstanding cost of any mortgages.
Although banks can be seen as pretty intimidating institutes, the reality is that they are operated by people and as a result, they can be sympathetic when certain events arise. In most instances, a bank will prefer to come to an arrangement that will allow them to receive their money, as opposed to being forced to repossess a home and potentially make a family homeless.
Tundra Mortgage Brokers will strive to come to different terms before pursuing legal proceedings; especially if the borrower is simply struggling to meet their repayment schedule. In plenty of cases, lenders have been known to prolong the duration of repayments to lighten the load each month. Others are happy to provide a temporary reduction in costs, until the home owner gets back on their feet (with a time limit).
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What is the worst case scenario?
If a borrower is completely incapable of paying and they will even be unable to meet reduced options, then a bank may have no choice but to consider repossessing the home. It’s worth noting that this is always a last resort and the majority of lenders will always try other routes before pursuing this one.
When a home owner can’t pay back their mortgage, a bank will then issue them with a written notice that will allow them time to get the money together. If this deadline is passed, then a formal notice of eviction will be issued, followed by a repossession order. The occupants will then be given a time limit to vacate the premises and a bank will then change all locks and consider their options as far as selling the property is concerned.