Highlights
- Be upfront with the bank regarding your financial situation.
- Negotiate with the bank about repayments.
- Avoid a mortgage default.
'May PERAan' is SBS Filipino's podcast series which features financial experts seeking to answer the most common questions about money and finances.
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Ano ang pwede kong gawin para hindi mauwi sa foreclosure ang bahay ko?
SBS Filipino
22/03/202209:17
"If you think that you will have difficulties making mortgage repayments, it's better to start making contingency plans early. I advise talking with your bank right away," financial expert Maria Papa says.
By preparing early and talking with your bank, Maria shares that you lessen your risk of foreclosure.
"All banks have a financial hardship hotline. Give them a call because as soon as they know what's going on, you're at a better spot for them to be able to help you with your home loan."
When dealing with the bank
Be upfront
"Tell them the reason for the financial difficulty - if your husband, let's say lost his job. Tell them that you're expecting that he gets back on track in probably three or six months. Be upfront with your letter to the bank."
Negotiate
"You can request for a change in repayments. Let's say your repayment is $3,000 a month, you can ask if the bank can lower it to 1,500 for the next two or three months."
But if your financial hardships get to be too much, you can try and request to halt repayments for a few months.
"Talk with the bank and see how far you can go."
Why you should talk with the bank before problems arise
"Some people prefer not talking to the bank early on because they want to wish the problem away, but the problem is there.
"Don't go through a situation where you have to encounter a default."
Defaults
A mortgage default occurs when you fail to make your mortgage repayments.
Aside from potential fees due to missed repayments, the interest of your loan can increase.
"If you're late on your repayments, your credit report takes a hit. Once your credit report takes a hit, it's hard to get it back to where it was before."
"Before defaults happen, talk and negotiate with the bank."
Temporary vs permanent
"Job loss and other financial challenges are temporary. Analyse your industry. Give it another few months, you'll find another job and get back on track."
On the other hand, a default on your credit report will affect your ability to seek out loans in the future.
"If by any luck, your situation improves much quicker than expected, you can go back to your bank and ask that your original repayment plan be reinstated.
"Moving forward, to prevent the situation from happening again, have an emergency fund. Set aside around 10% of your salary."
