When you get a mortgage you become a homeowner. However, the lender retains charge over the title of the property until you settle the entire loan according to the contract. The bank can sell your home if you don’t pay your mortgage. It’s called a mortgagee sale.

But banks and other mortgage lenders don’t like to take this route. It’s bad publicity, and it sends a negative vibe to existing clients. Most lenders would rather go through many rigorous legal steps to avoid a mortgagee sale or to give you a chance to resume making mortgage payments.

Here’s a look at what lenders do to avoid mortgagee sales and what happens when you fail to pay the mortgage.

Lenders will Ensure the Loan Meets Your Needs

It’s not easy to make regular mortgage payments each month or fortnight without fail for decades. You must have a compelling motivator. This is why banks want to ensure that the mortgage fulfills your needs. This will be your motivation to keep up with the mortgage payments.

The bank will ask a few questions including:

• How much you want (market value of the home).
• Whether you would want to protect the home through products like mortgage insurance.
• How you plan to make payments? If you want to make regular payments of similar amounts throughout the loan term or if you may occasionally want to make lump-sum payments.

The bank will also review your income and expenditures to ensure that you can meet the mortgage payments, including applicable fees, and pay your other regular bills without straining your finances. However, each mortgage application is determined on its merit.

Banks are thorough when processing mortgages and follow the responsible lending code. But what happens when circumstances change and you fail to pay the mortgage?

The Bank Will Engage the Formal Process of a Mortgagee Sale

If you are unable to pay your mortgage, the bank is expected to treat you with respect. But that doesn’t mean they will be easy on you.

The intention of the bank is first to make sure that you regularize the account. Secondly, the banks give you a chance to discuss any underlying hardship that may have caused the default. There are various options and solutions in cases of hardships.

When you consistently fail to pay, the bank will issue you with a letter of demand and a mortgagee sale may be inevitable.

Don’t wait until the bank engages the formal process for a mortgagee sale. By the time such a decision is made the late payments and missed payments would have negatively impacted your credit history, attracted penalties and inflated the debt tremendously. You may need extraordinary financial assistance to avoid a mortgagee sale.

Urgently reach out to a trusted mortgage broker to help you find urgent refinancing and save your home from going to a mortgagee sale.