Life doesn’t always have to be straight. This happens – or not – regardless of whether you own a property or live for rent. The trigger of life crises in connection with financial bottlenecks is usually not the property, but loss of income due to unemployment, illness or separation from the partner.

However, rising interest rates after a very favorable fixed interest period can also be decisive. You cannot prevent every eventuality. However, if you have a property and it is still financed, active action on your part is necessary.  

What measures are absolutely necessary?

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At first there are only two things you can do, but you should definitely do: speak and inform. Unfortunately, and this is more common practice, borrowers do not act proactively towards their creditors. This doesn’t happen because you don’t see the dark clouds on the horizon, but because many stick their heads out of the misunderstood sense of shame in the sand.

At your bank, you should look at what is not sensible but understandable in the family and friends group at your bank. Unlike family and friends, lenders deal with clients who run into financial difficulties on a daily basis. That is why there are separate departments and specialized staff for these cases.

The best time to talk to your banker about this uncomfortable situation is before the first installment bursts. You are signaling that you have identified a bottleneck as critical and that you are by no means indifferent to the situation.  

What expectations does your banker have?  

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You don’t believe how “happy” you are at making your bank timely. Don’t get me wrong! The banker, like you, is happier if this situation can be avoided. However, practice often shows the opposite. Waiting, delaying, trivializing, or completely ignoring the correspondence are no tried and tested advice and ultimately lead to coercive measures.

Even if something could still be saved despite this behavior, there is only one person sitting there who can be influenced by the appearance and actions of his debtors. Once a loan has been canceled, automatisms come into play, which very often result in a forced procedure.

The bank itself is a lender and that is how it earns its money – not by terminating and amortizing loans. That is why the bank advisor is also interested in ensuring that their financing runs again in the medium term.  

What steps do you have to take?

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  • Inform your bank about the reason and the realistic duration of the bottleneck, in your opinion
  • Explain how the bottleneck can be resolved
  • Talk about a temporary rate hold
  • Clarify whether, when and how suspended installments are made up for

The bank is happy about every customer if he responds at all in such situations. If he then shows himself clearly in his thoughts and is solution-oriented, the bank will respond favorably to suggestions. Of course, the lender also checks the feasibility. If the customer comes with a turnkey solution, this means less work for the banker too.  

However, there are also constellations in which despite timely action and commitments there is no possibility or prospect of medium-term improvement in economic conditions. In these cases, too, it is important not to “put your head in the sand”, but to play a constructive role in limiting the damage.

Sale of the property

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In this case, the sale of the property may no longer be a taboo subject. If it is the family home, a lot of personal contribution and passion have been brought in, such a decision is painful and bitter. In most cases, however, there was also a life in front of your own property.

Coordinate a timetable with your bank in this regard. As long as you are still the seller, you can design. Be it the price or the time of delivery.

Once your property is under forced administration, you have no choice but to react. Court costs, attorney fees, no negotiation option in the case of a possible prepayment penalty result in lower proceeds from a forced auction than from a direct sale.

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