A home mortgage is a long-term commitment. Compared with any other loans, the maximum tenure offered on a home mortgage is long, almost 15-25 years. Although there are pre-settlement options, getting a loan that would take up a portion of your monthly expenses for at least the next 15 years can be intimidating. The most common fear is a job loss? Here’s what you can do.
Talk to your lender
Rather than defaulting on your payments, inform your lender immediately about your job loss, which can help in making them reduce the mortgage interest rates or accept partial instalments for the next few months. A formal letter, with an assurance to resume payments once you get a new job, would go a long way to help your situation. Also, it’s critical to note that if you are an expat it is illegal to leave the country without having your loan cleared.
If you have mortgage insurance, it is just what you need at this dire hour. A mortgage insurance — not to be confused with general property insurance, which provides coverage on property damages — provides coverage if the policyholder goes default on payments due to job loss, death or permanent or temporary disabilities. If you have one, claim for the coverage of mortgage instalments.
Find other income sources
If you have income sources other than your day job, check if you can make use of it to pay the mortgage. Review your monthly budget and cut down on the unnecessary expenses and give priority to the mortgage instalments.
Ask for financial assistance
Leverage your social network to seek friends or family for financial assistance. There may also be some non-banking lending sources available. But it’s a good idea to make sure that those lending sources wouldn’t adversely affect your credit score.
Use your savings
If you have some savings at your disposal, you can use that to pay your EMIs. You can refill the used amount once you find a steady source of income. Don’t use all of your savings and keep aside at least 30 per cent for emergencies.
Find a new job
You must try finding a new job immediately. This is the one thing that will get you back on track financially. It helps if you have a savings fund that will help in paying at least three to six EMIs. Make sure your mortgage insurance provider will cover you during a job loss.