Life isn’t always predictable. Everyone has to go through unforeseen ups and downs. Just a few years ago, you may have been in cloud nine after buying your dream home. Today, you may be going through some financial hardships and wondering how to pay off what feels like a billion dollar mortgage. If that is what is happening in your life, then what are the options available to you?
But first, let’s take a brief look at the consequences of not paying your monthly installment. If you fail to pay your mortgage after repeated notices, the lender will repossess your home, effectively leaving you homeless. But that’s not the end of your troubles. The consequences of defaulting on your home goes further and can plague you for many years.
Your defaulted debt will show on your credit report. Employers may not want to hire you because they do not trust employees with huge debts to do ta job well. The lending bank may seize any money you may have in an account with the bank. If the lender thinks you are deliberately refusing to pay up, they may haul you to court. Lastly, you may never be able to take out another mortgage.
Now let’s take a looks at the options available to you.
- Refinance your mortgage: Refinancing a mortgage is a good way to lighten your burden and repay your loan. Negotiate a lower interest rate and a longer loan tenure so that the monthly installment will be more affordable. Once your situation has improved, you can decrease the tenure with another mortgage refinancing.
- Consider extending the loan tenure: In some special cases, you may be allowed to extend your loan tenure. If this option is available to you, then take it. Extending the tenure will increase your total payment, but will decrease your monthly payment. It’s better to pay more and be able to pay on time than not being able to pay at all.
- Find a tenant to live in your home: You can make the house for pay the mortgage itself by renting out rooms to a tenant. This is what a lot of people do. But you can’t just rent your house. There are laws that say whether you can rent your house or not. Talk to a property agent to find out.
- Try negotiating with the lender: Not all lenders are cold and tightfisted. Some are actually willing to listen to their customers’ woes and help them out by lowering the interest rate or allowing them to defer payment. Rather than negotiation yourself, get a debt counsellor to do it for you. Banks are more willing to listen to professionals and they are good at getting things done.
- Consider selling your home: As a last resort, you may want to sell your house. As bad as it may sound, this option may actually be good for you in the long term. You will become debt-free and start anew. When you situation improves, you can buy another house.
Do your research and consult with friends and people in the know before taking any of these options. Every person needs a unique solution. What works for one may not work for another. If you are going to refinance your home loan, make sure to compare housing loan rates in Singapore before taking any step.