Mortgage security and insurance

Securing your own home through a mortgage is still popular, even as interest rates rise. However, it is a big commitment that is not without risks. In this blog we will look at these risks and how to prepare for and prevent them.

Possible risks of default

  • Job loss: If you lose your job, it may be difficult, if not impossible, for you to make repayments mortgage.
  • Illness or injury: Long-term incapacity for work can lead to financial difficulties and problems with mortgage repayments.
  • Death: If you die, your survivors will have to pay the mortgage themselves.
  • Accident: Damage real estate it can lead to high repair costs that you will have to pay.

What happens if the client does not pay the installment?

If the client repeatedly fails to pay the monthly mortgage payment (usually 3 times in a row) without giving a reason and does not respond to the bank's calls, the bank may proceed to the so-called repayment of the loan. In this step, the bank sends the client a loan repayment letter and asks him to pay the entire mortgage balance within a specified period (e.g. 14 days).

If the client does not pay the balance of the mortgage by the specified date, the bank has the right to sell the property, for which it provided a mortgage, by auction or in another way. The proceeds from the sale will be used to pay off the client's remaining debt.

Long-term effects on the client

The application of a lien has serious and long-term consequences for the client. This also includes recording in the credit register. The mortgage repayment record is automatically entered into credit register.

For a period of at least 5 years, it will be practically impossible for the client to get any loan, mortgage, credit card, or even a current account. After 5 years there is a chance for approval new loan, but probably with a higher interest rate and necessity co-borrower with a clean credit history.

How to protect yourself from unexpected situations?

  • Mortgage insurance: Risk life insurance will help you pay off your mortgage in the event of your death, disability or long-term illness. Property insurance will help you cover the cost of repairs in the event of property damage.
  • Create yourself emergency fund: It is recommended to have a reserve of 3-6 months of expenses to help you get through tough times.
  • Reduce your expenses: Before you take out a mortgage, it's important to reduce your expenses and save as much money as possible.
  • Be flexible: Life is full of unforeseen events. It is important to be flexible and able to adapt to new situations.

A mortgage is a big commitment, but with a little planning and foresight, you can protect yourself from the risks and ensure a peaceful future. Get ready you can click HERE for mortgage insurance.


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