11-19-2008, 10:15 PM
What concessions can borrowers obtain by bargaining with their banks?
The crisis of mortgage, followed in the recent years, can now turn into serious issues for both banks and borrowers. The latter's solvency has plummet, while employers are obliged to cut job positions.
There are several ways for easing the borrower's life, for example - send them on a "credit holiday" or to prolong the crediting term.
Bankers say that if a borrower got into a difficult financial situation, they are ready to help him. It's not about kindness... It's just that it's more convenient for them to make some concessions than to deal with mortgage confiscation and its further sale; it's also not easy to do because it may require a lot of lawsuits for the bank to take the mortgage. In the result, it risks to have big expenses and even losses.
At the same time, not everybody can have benefits and facilities. Only disciplined borrowers can count on being understood. The bank is almost always interested in supporting a good solvent client.
Banks use several criteria for pointing out correctly the costumers that need help. First, it's the client's crediting history: were there delays, how many years has the costumer been the bank's costumer, how other credits are reimbursed. A decisive key is the client's possibility to offer additional mortgage - apartments, houses, cars land areas. If the borrower has no other additional mortgages, he can take a warrantor (guarantor) with stable income.
Credit holiday
A credit holiday means that the bank gives the client a period for rehabilitating his financial situation by not paying the credit for a while. This while usually lasts not more than 6 months. Giving a longer credit holiday is impossible to realize, since banks are not philanthropic organizations.
The second possible option is to go again through the formalities for a longer term. It gives risks, though. Remember that the banks will want the borrower to reimburse the credit before he retires. Therefore prolonging the reimbursement period may not always be accepted by banks.
Juggling currencies (for non-EEA countries)
Certain banks are ready to convert the credit given in foreign currency into a credit in the national currency. This operation is convenient for the borrower only in once case: if the national currency keeps depreciating.
Otherwise, there's no sense to change the credit currency.
The crisis of mortgage, followed in the recent years, can now turn into serious issues for both banks and borrowers. The latter's solvency has plummet, while employers are obliged to cut job positions.
There are several ways for easing the borrower's life, for example - send them on a "credit holiday" or to prolong the crediting term.
Bankers say that if a borrower got into a difficult financial situation, they are ready to help him. It's not about kindness... It's just that it's more convenient for them to make some concessions than to deal with mortgage confiscation and its further sale; it's also not easy to do because it may require a lot of lawsuits for the bank to take the mortgage. In the result, it risks to have big expenses and even losses.
At the same time, not everybody can have benefits and facilities. Only disciplined borrowers can count on being understood. The bank is almost always interested in supporting a good solvent client.
Banks use several criteria for pointing out correctly the costumers that need help. First, it's the client's crediting history: were there delays, how many years has the costumer been the bank's costumer, how other credits are reimbursed. A decisive key is the client's possibility to offer additional mortgage - apartments, houses, cars land areas. If the borrower has no other additional mortgages, he can take a warrantor (guarantor) with stable income.
Credit holiday
A credit holiday means that the bank gives the client a period for rehabilitating his financial situation by not paying the credit for a while. This while usually lasts not more than 6 months. Giving a longer credit holiday is impossible to realize, since banks are not philanthropic organizations.
The second possible option is to go again through the formalities for a longer term. It gives risks, though. Remember that the banks will want the borrower to reimburse the credit before he retires. Therefore prolonging the reimbursement period may not always be accepted by banks.
Juggling currencies (for non-EEA countries)
Certain banks are ready to convert the credit given in foreign currency into a credit in the national currency. This operation is convenient for the borrower only in once case: if the national currency keeps depreciating.
Otherwise, there's no sense to change the credit currency.
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