Losing a job is always a difficult and unpleasant event, especially if we tied our future with a specific company. However, the situation becomes even more difficult if we have a loan to pay back. The bank will certainly claim its payment after delaying the repayment of even one installment.
Telephone prompts, in writing and, as a last resort, a visit by a debt collector from a bank are troubles that a borrower will have to face, who cannot pay the installments. While in the case of loans for a smaller amount this may not be a long-term problem, the matter becomes more complicated in the case of a mortgage. So what to do so as not to sink into credit arrears? What about a mortgage if you lose your job?
Losing your job – contact your bank
Losing a job and mortgage: first of all, face the problem and do not avoid contact with the bank. Although banking institutions are not obliged to suspend the repayment of installments, they want the loan to be repaid. So if you don’t have the money saved to pay back the installments peacefully while looking for a new job, then go to the bank.
Explain the matter with his employee. Submit a letter requesting suspension of installment repayment. If you have already found a new job, but you start it after some time, then attach an employment contract or a preliminary contract, signed with the employer.
This will make your application credible and prove your willingness to continue paying your debts. In many cases, banks go hand in hand with their clients, although a negative decision may also occur.
Consolidation secured by a mortgage
If we have a property that we can use as collateral, it’s worth trying to get a consolidation loan. Although the obstacle may be the lack of income or income low enough that we do not have creditworthiness, it is worth asking a family member to take a loan.
The bank will consider the income of all borrowers. You can also take a loan secured by a mortgage on a real estate belonging to someone other than the borrower. However, this person must agree to this.
Mortgage – an extension of the repayment period after losing a job
A way that does not completely eliminate the need to pay installments, but reduces their size is to extend the loan period. Although it increases the total cost of the loan, it can be a lifebuoy if all or part of your income is lost. When we find a job, you can always pay off the whole loan or pay two installments per month instead of one, avoiding paying interest.
Loan insurance against job loss – is it worth it?
Before signing a loan agreement, you should consider buying a job loss insurance. Is it worth insuring against job loss in the case of large cash loans? This question cannot be answered unequivocally, because there are many different factors involved. People who decide to buy unemployment insurance must remember that it will not cover the cost of the entire loan, but a certain number of installments, usually for a period of twelve months, although there is insurance covering installments up to twice as long.
In addition, insurance guarantees payment of the benefit only in certain cases. The employee must lose his job through the fault of the employer and obtain the status of an unemployed person. It is worth reading the GTC of the insurance carefully, as they usually contain the whole list of exclusions.