Mortgage restructuring: conditions and documents

2024 Author: Howard Calhoun | [email protected]. Last modified: 2024-01-07 20:55

Before you start talking about restructuring, you need to understand what a mortgage is and what it gives the average person. In a simple sense, this is a loan provided by a bank for the purchase of housing, in which the property remains in the ownership of the debtor, but is pledged to the creditor, that is, if the debtor does not fulfill his obligations, the creditor can use the right to sell the collateral property in order to compensate for his losses. On the one hand, a mortgage makes it possible to acquire housing, but on the other hand, you need to understand that if you purchase an apartment in this way, you must remain solvent for a long time. In today's realities, it is quite difficult to maintain solvency due to many reasons: job loss, wage cuts or he alth problems. However, it is not important for the bank why the debtor cannot make the required payment. What to do if there was some kind of force majeure and it is no longer possible to pay contributions in the same order? Here, a service such as mortgage restructuring comes to the rescue.

What is this?

At the moment, in practice, the restructuring of loans has not yet received due distribution. The thing is that such an exit is beneficial only to the borrower, on the part of the bank the only benefit is that the debtor will pay, but not in the same way as before. Restructuring is a change in lending conditions, after which the borrower receives more favorable conditions for the payment of funds. This procedure does not reduce the amount of payment in the end, and even more so does not remove his debt from the borrower, he is obliged to repay the loan further, but on more favorable terms.

Changes after restructuring may be different, for example, you can change the order of debt repayment or the amount of the monthly payment. Sometimes banks provide the payer with the opportunity to repay only interest for the use of funds of a financial institution, payments on the principal debt in this case are deferred for several months.

What needs to be done to achieve restructuring?

Restructuring a distressed mortgage is not an easy task. But if you put enough effort, attention and time, you can improve the conditions for paying your debts to the bank.

Terms of mortgage restructuring

First of all, you need to prove to the financial institution whose services you used that you really need it. To do this, you need to collect a package of documents that will confirm your difficult financial situation. It is best not to delay asking for help, otherwise,if it comes to delinquency, it will have a negative impact on the bank's decision to restructure your mortgage. If your relationship with a financial institution has previously developed well, and your supporting documents will satisfy it, then you can count on more favorable payment terms. But there are times when the bank does not meet the needs of the client, in which case there is another option - to look for another financial institution that will agree to refinance your loan.

Documents to collect

Let's consider the standard package of documents that any bank requests when making a restructuring. So, it includes:

• Original or copy of work book certified by the employer.
• Certificate of income from the last job for the last year.
• If there are additional income, you must provide information about them.
• Questionnaire for granting restructuring.
• Passport.
• Documents on the presence of debts on other loans, as well as documents confirming already fulfilled obligations.
• Loan agreement concluded between the borrower and the financial institution that provided the mortgage loan.
• A copy of the mortgage, which is certified by the organization that issued the mortgage.

If any, it is necessaryprovide the following documents:

• Copy of marriage certificate.
• Documents of education received.
• Confirming ill he alth if restructuring was required for that reason.
• Military ID or registration certificate.
• Documents confirming the ownership of immovable or movable property.

If you use the services of a real estate agency, you will have to collect documents for them:

• Documents establishing ownership of property.
• Real estate title insurance contract.
• Documents of co-borrowers, if any.

Forms of restructuring

Restructuring can be done in various ways:

• Granting credit holidays - during this period, the client is given the right not to repay the body of the loan, but to pay only increasing interest. The period for which such a right is granted - several months, is determined individually. The consequences of using this method of refinancing is the extension of the payment period.

• Mortgage restructuring through refinancing is one of the best ways for a client. When using it, the debtor takes a loan from another bank for the amount of the debt in the first and repays the mortgage with this money. The benefit is that most often the conditions of the second bank are better,than when paying in the usual way, thus, the payer wins a good amount.
• Increasing the loan term - with this method, the restructuring of a mortgage loan consists in stretching the term for the return of funds, as a result of which the amount of the monthly payment decreases.
• Repayment ahead of schedule - everything is simple here, the debtor returns only the funds that he took, without interest for using other people's money, so you can save a lot.
• Cancellation of pen alties and fines in case of late payments. Such restructuring of the mortgage is possible only if the client contacts the bank in time and provides comprehensive evidence of the occurrence of a difficult financial situation.
• Change the currency of the loan - this option is provided by some banks, if there has been a jump in the exchange rate.
• There is also a state mortgage restructuring. In simple terms, this is state assistance in repaying a loan. The Law on Mortgage Restructuring indicates that this can help payers repay the loan by 25-70%. It all depends on the amount of the remaining debt.

Home Credit Bank

This financial institution has a special service - credit rehabilitation, you can use it even if you are already overdue with payments. Anyone who wants to rehabilitate can apply for restructuring right on the websitejar. In the application, in addition to personal data, the reason for the appeal is also indicated, why it is not possible to pay monthly payments in full on the old terms. The restructuring option is also indicated here.

Sberbank

This bank offers 2 options that every client who finds himself in a difficult financial situation can use: changing loan terms and credit holidays. The procedure is performed only when evidence of a predicament is provided.

VTB

Mortgage restructuring in VTB is also possible. The bank provides such a service, but all conditions are discussed in the personal presence of the debtor and for each case individually. To provide the service, you must apply to a bank branch with an application for restructuring a mortgage loan.

OTP bank

The service is valid not only for mortgages, but also for car loans and cash loans. Here, as well as in Sberbank, they provide an opportunity for restructuring through an increase in the payment period or deferment of payments. You need to apply for benefits in the same bank where you took the loan.

Remember, not all institutions list restructuring as a formal service, but it is still possible. In any case, if you have any difficulties with payments, contact the bank that served you when applying for a loan. As a rule, all of them are loyal to their customers, so you always have the opportunity to get help in case of difficulty. You need to give complete information about the problem you are having and try to collect all the documentation to provide the restructuring.