4 Ways to Overcome a Remortgage Problem

Since equity release options present many unique risks, it is common to experience a problem with a remortgage. The risks of these loans include a high probability of default, the loss of assets to protect against bankruptcy and insufficient funds to cover the remortgage payoff. If you are experiencing problems with your remortgage that may prevent you from keeping the loan in good standing, act fast with these strategies to avoid losing your asset all together.

#1 File a Hardship Letter

A hardship letter will be the primary means of saving a remortgage loan for a borrower who is suffering from a financial crisis. Examples of crisis include job loss, extended illness, end-of-work accidents or even divorce. If you experienced an unforeseen emergency that is preventing you from repaying your loan, use a letter to explain the circumstances. You will have to prove three main things: you paid the loan before the emergency, there is a pressing emergency that is preventing you from continuing payment, and the emergency will not go away in the near future. Successfully recording a hardship with the lender may permit you to refinance or defer your loan payments to keep your loan from defaulting.

#2 Opt for Deferment or Forbearance

Deferment is the most common result of a successful hardship letter. With deferment, you will not be required to make any payments on the loan for a given period of time. Interest may still accrue, and interest payments may be required. However, this can give you a chance to locate a new job or recover from your emergency. Forbearance is only an option if the loan has already gone delinquent. In this case, loan forbearance is a cessation of legal action on the default until loan payments can be brought current. Payments still come due.

#3 Refinance the Loan

Refinancing before you reach the point of needing a deferment or forbearance option comes with less penalties. Refinancing basically means adjusting the terms of a loan to make it more affordable. Through refinancing, you can reduce your interest rate or reduce your monthly payments. It is even possible to raise monthly payments in order to pay off a loan faster. Since refinancing usually favors the borrower, a lender will assess a fee to go through with the option. The fee may be avoidable if you are refinancing in response to a successful hardship letter. 

#4 File a Legal Complaint

Remortgages are very controversial loans, particularly when they are made to senior citizens who have already paid off a mortgage. At times, predatory lending practices may be applied. Predatory lenders violate federal regulations by extending loans to borrowers against common standards. If you feel you may have been a victim of predatory lending, there are legal options to help you keep your home and avoid default. These options include federal assistance, or even loan forgiveness in some extreme cases. A full list of agencies to contact to better learn your legal rights is provided on the Department of Housing and Urban Development website: http://www.hud.gov/offices/hsg/sfh/pred/predlend.cfm

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