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What to do if you can’t pay your home loan

Home Loan

To become a house owner is something that all of us dream of. To make that dream come true not all of us can pay cash for a house and we end up taking a mortgage or home loan. There is nothing bad with this step as it is most probably the only way we can own that dream house. Life is however unpredictable and you can find yourself in a situation where you can no longer afford your monthly repayments. What action can you take in such a situation?

There are a number of options available:

Approach your bank

Approach your bank and enter negotiations with them. Never make the mistake of ignoring them. Try and ask for an extension to your home loan which can lower your repayments. If you find yourself completely unable to pay anything do a voluntary surrender whereby you give up your mortgage.

Rent out your house

This is not always an easy option as you probably enjoy staying in your house. The nice thing about taking this route is that you can still keep your house. It is also advisable to take this route if the rental income will cover your mortgage payments and if you can find alternative accommodation that is relatively cheap. Be sure to find a reliable tenant who pays rent on time.

Get help from a debt counselor

Some might find this step rather embarrassing but rest assured that this can be for your own benefit. One benefit is that creditors cannot take legal against you or even take back your house if you are under debt counseling. Another benefit is that a debt counselor if a professional and will assess your expenditure against your income and can help you get rid of expenditure that is not necessary. The downside of undergoing debt counseling is that you will not be able to obtain credit during this process.

Sell your house

This is the option you would rather avoid if possible, but if you have no option take this option and let go of that house. It is better to take this option and not damage your credit record and also avoid accruing interest for late repayments. Take the initiative to sell the house on your own rather than waiting until it is too late and the bank takes control of the sale. If you see the house you will likely get better price unlike a situation where the sale is done by the bank. When the sale is done by the bank they are more likely to auction the house and any administrative and legal costs will be for your account.

We hope you will find the above options useful and we emphasize again that don’t leave approaching the bank until it is too late. If it gets to a situation where the house has to be put up for sell rather do it yourself before the bank puts up the house for auction.