How the home loan rate can be reduced

March 23, 2020 0 Comments

Reduce home loan rate – how does it work? Anyone who is thinking about building or buying a home should think about how high the home loan rate can be beforehand. In retrospect, reducing the home loan rate can be complicated.

Bank agreed to this project, there is no major problem.

  • As a rule, the banks are ready to talk because their main concern is that the debt be repaid. Before the borrower becomes insolvent, the auctioneer will agree to have the rate reduced.

If, as a borrower, you get into the uncomfortable situation that the rate for the home loan is suddenly no longer affordable, you should definitely seek a conversation with the bank. Many loans burst only because there is too little communication between the contracting parties.

Inform the bank in advance whether it is a short-term bottleneck or something longer-term.

  • Find a solution together with the bank and transparently list all financial liabilities. The bank can then decide exactly what to do.

Mortgage lending is extremely helpful and foresight is extremely helpful. Because the view into the future does not go far and the financial situation can change suddenly, both for the positive and for the negative.

The following situations can cause the rate to decrease:

The following situations can cause the rate to decrease:

  • illness
  • Job loss
  • Lower salary by changing jobs
  • divorce
  • Death of spouse
  • Additional expenses due to family growth

These events and reasons can lead to the fact that the originally agreed rates are suddenly significantly too high and can no longer be paid. In these cases, the borrower can ask the bank whether the rates can be reduced. He alone is not entitled to make such a reduction. This is simply because a reduction represents a contract change that can only be decided jointly by both contracting parties.

Home loan quick comparison

Home loan quick comparison

A foreclosure of the property usually means proceeds that are not sufficient to cover the remaining debt. Since the borrower is already insolvent, the bank may have to wait a long time for the rest or have to post the shortfall entirely as a loss. The debtor, on the other hand, may still have debts after the auction and also have lost his property.

Residual debt insurance is a tried and tested means of avoiding a reduction. However, it does not apply in every case, but mainly in the event of sudden unemployment.

Another method is debt rescheduling. Debting the home loan gives more financial leeway. In this case, a new home loan is taken out that has a lower rate.