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Since a mortgage is a loan secured against your home, the lender making available the loan may repossess your home, if you default in the monthly repayments. If you are not eligible for any kind of governmental assistance or you do not possess a policy for mortgage repayment insurance, it is crucial to be aware of your rights in the event of repossession. You may consider the following strategy to prevent the loss of your home.
This is the most straightforward avenue you can take. Although, you cannot retain your home, you can take control of it while selling it. You may even make a profit on the sale, if the current worth of the home is high enough.
If disposing of the home is not a viable option, discuss with your lender about possible choices. Most lenders do not initiate repossession proceedings within 3 months of missed payments. Some lenders are willing to wait until 6 months of arrears. It is however, crucial to talk with your lender before missing any of the repayments. You lender may agree to several options depending upon your circumstances.
Your lender may prolong your mortgage period by several years. This will serve to ease out the monthly repayments. You may adopt this repayment scheme until you can sort out your financial problems. Since extending the term will increase the total interest, it is vital to reduce the mortgage period, once you can meet the old schedule of payments.
If you require a short while to catch up on your mortgage payments, you may request a payment break. You lender may readily agree to this plan, if you have a flexible mortgage. A payment holiday could affect your credit report adversely. However, if the strategy can check repossession, you may go for it.
An interest only mortgage involves the payment of no more than the interest built up every month. This scheme will lower the monthly dues drastically. Since this plan will cost more in the long term, request the lender to provide the arrangement for a pre-set period.
These techniques may help you avoid repossession. It is crucial to bear in mind that you cannot adopt them indefinitely. It is important to work out a solution for your financial troubles in the meantime.