The rise in inflation, the increase in the Euribor, and economic instability have put many mortgage holders against the ropes. Since the beginning of the War in Iran, more and more families are seeing their finances strained to the point of having difficulty paying their monthly mortgage installments.
In the most serious cases, non-payment can lead to consequences such as late payment interest, inclusion in files like ASNEF, or even the seizure of the home if the situation prolongs. However, according to explanations from HelpMyCash, there are alternatives to avoid reaching that scenario.
Below, a practical step-by-step guide to act in the face of economic difficulties and avoid mortgage default.
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3 minutes
First step: recognize the problem
From HelpMyCash they recommend avoiding "the ostrich tactic." Ignoring the problem not only does not solve it, but aggravates it: if the installment is not paid on the agreed date, the bank will apply interest and commissions that will make the debt more expensive.
Therefore, the most advisable thing is to anticipate the possible default. Getting ahead allows avoiding sanctions and increases the probabilities of negotiating with the banking entity, especially if the client does not have previous debts.
Second step: talk with the bank
The next step is to contact the bank as soon as possible, either through the office or the personal manager. In that meeting, the account holder must explain their situation clearly and request solutions to be able to face the problem.
According to the analysts of the comparator, the entities are not interested in defaults occurring, which is why they are usually open to negotiating with clients who are experiencing temporary difficulties and act in good faith.
Third step: evaluate solutions
The most common thing is for the bank to propose modifying the mortgage conditions to reduce the monthly payment. This can be done by extending the repayment period or applying a grace period, which allows temporarily stopping payments or paying only interest.
If the client meets the requirements to be considered vulnerable, they can avail themselves of the Code of Good Practices. This mechanism allows reducing the monthly payment for five years, applying a partial grace period, extending the term up to 40 years, and lowering the interest to Euribor minus 0.10% during that period.
In any case, the client must assess which option best suits their situation, taking into account that, although they will pay more interest in the long term, they will avoid penalties or the foreclosure of the home.
Fourth step: modify the writing
Once an agreement is reached, it is necessary to formalize it through a mortgage novation before a notary, which allows changing the conditions of the contract. The process involves going to the notary twice: once to receive prior information and another to sign.
This operation may have costs, such as an average appraisal of 300 euros and a novation fee that cannot exceed 0.1% of the outstanding capital if the term is modified. However, if the Code of Good Practices is applied, these expenses are not borne by the client.
Fifth step: prevent future problems
Once the rough patch is overcome, the objective must be to prevent the situation from repeating itself. From HelpMyCash they advise that installments do not exceed 30-35% of income, even in variable mortgages.
In addition, they recommend creating an emergency fund that covers between three and six months of basic expenses, including the mortgage, to be able to face periods of economic difficulty with greater security.