It has probably taken years of planning coupled with lots of sacrifices before you have finally been able to buy your own house. Home repossession can quickly turn this dream into your worst nightmare. The lender you have borrowed from or who you have mortgaged your home to can repossess your home if you default in your payments.
There is no telling why and how your financial situation can turn really scary. But the fact remains that you have not been able to pay what is due to your lender, in turn giving him an opportunity to repossess your home.
But home repossession does not need to be the harsh truth every time you find yourself crunched for finances. There are ways in which you can avoid it:
1. Communicate with your lender
More often than not the solution is as simple as talking about it. Approach your lender with a proof of your situation. Do not delay talking to your lender or don’t wait till the lender approaches you demanding his dues. Apprise him of your financial incapacity when you get any wind of it. There is a strong chance that you can negotiate the amount due to your lender at the time of your financial crunch.
2. Discuss solutions with your lender
Check with your lender if you can be allowed a temporary payment holiday. This means that for a stipulated period of time (obviously agreed between you and the lender beforehand) you don’t need to pay the lender anything. Once that time period is over, you can resume paying your installments. This will give you some time to get your finances under control again.
3. Extend your mortgage term
Request your lender to extend your mortgage term. An extension on your mortgage term allows you to reduce the amount of your regular installments, in turn, helping you ease out the financial pressure. An extension on your mortgage however also means that you are paying the interest on your mortgage for a longer term, thus, marking an overall increase in the amount you end up paying in the long run.
4. Alternate income
For a certain period, lease out your current home and move into something which has a lesser rent. The difference between the two rentals can provide you with the bandwidth to clear your monthly installments. You could also try other options like getting a roommate or leasing out just one part of your house so that you can get some additional income without having to pay out anything.
5. Don’t borrow more
Always bear in mind that you are in a tight financial situation. Borrowing more money might seem like a solution. But it is only temporary and is going to add to your financial burden in the long run. Try switching your mortgage to an interest-only mortgage. However, this might turn out to be a very expensive option in the long run.
Think through all your options before succumbing to home repossession. There just might be a chance to save your home.
This post is written by Jackie Cooper. He is one of the finest property dealers in the Canberra region. To know more about the property in Canberra you can visit his website.