There are many reasons that people face due to downfalls in the economy. Imagine the news of losing a job, which numbs you and your family members. Especially, in situations if you have loans or mortgages to pay. As much as buying a home is a tough task to do, paying the mortgage for it is even harder. The stress caused due to these lump sum amounts is truly frustrating. As a fact, there are certain techniques that are used to reduce the mortgage. In collaboration with the lender, you could discuss with them to reduce the amount. However, you should be able to convince the lender, informing your financial crisis.
What are the methods of reducing these amounts? How can these financial institutes provide some relief to their customers? These are some concerns that many have in mind, prior to mortgaging. There are many ways of reducing it, of which 3 methods are mentioned below:
• Decrease in the interest rates
This is one method of mortgage reduction that customers would feel relieved about. That is the lender could reduce the interest rate that is charged for the long period of mortgage. It’s not simple as talking with the lender and getting it decreased. It requires proof and research about the best technique. There are two ways that you could get this done;
– You could refinance the mortgage: This is writing off the loan amount in a shorter period of time, instead it would be reducing the principle value and not the interest.
– Explain the tough financial situation
• Restructuring the loan
If you have unforeseen expenses such as medical bills or child’s education fees, etc. you might not be able to repay as planned. Hence, you could consider restructuring the loan scheme by extending the number of years. The repayment on a longer amortization is lower than a short term, as the amount is spread for more years. However, a disadvantage of this method is that, you would be paying more interest in comparison to the shorter period.
• Reduction of the principal amount
This is another method of mortgage reduction, which is forgiving a part of the principle amount. If you’ve lost the job or having extreme financial difficulties, you could have a word with the lender and discuss terms for forgiving an amount of it. This is a method that most institutions aren’t fond of, unless your case is very significant. Hence, you need to provide solid evidence of your current financial status and crisis.
You should have good negotiating and convincing skills, based on valid reasons. Are you facing a severe financial crisis? Do you need assistance to decrease the repayment of the mortgage? The above techniques are some pointers to start researching about. You might be able to find a solution and feel relaxed.