What To Do When You Can’t Afford Your Home Loan Repayments
Being a homeowner is a joyful moment in life. BUT!!!!! How if you’re no longer to make home loan repayment? Do you have faith in yourself that you can still make your home loan repayment after 5 or 10 years? Due to the living costs are gradually increased in Malaysia, many youngsters and first-time homebuyers are feeling the pinch as they might not be able to continue to make the home loan repayments or even buy a house.
If you are one of them, you might feel upset and thinking of give up on this house. Listen to me, don’t give up so soon! There is always have several ways to solve any problems in the world. In order not to facing bankruptcy, continue read on to get these tips to rescue your current situation;
5 Useful Tips For When You Can’t Afford Your Home Loan Repayments
Ⓐ Restructure Your Debt
If you have been facing the difficulty to cover your home loan repayments for 3 months or above, you financial might be overburdened. Don’t freak out although its sound terrifying. Listen up, here is a method to you;
The firs step that you need to do is inform your lender about your current financial distress and request a little leeway to solve your financial issues. While, the most importantly is discuss with your lender about restructuring your loan affordability;
Here is the 3 things that you have to discuss with your lender;
1.To extend your loan tenure
You may check with your lender whether can extend the years of your loan tenure in order to lower the monthly installments. Although this way will increase the total interest costs and repayments overall, but it can increase your affordability. As other say, if you get profits from one side, you will lose something at the same time.
2.To lower interest rate
For your information, in certain situation such as market/ economy changes, bank will adjust the interest rates. Hence, you must keep watching the market changes and seek advice from bank consultant if there is possible to adjust the interest rates for you which based on your current financial situation.
3. Consider to refinance your mortgage loan
In fact, you can consider to refinancing your mortgage loan as your borrowing amount may be able to cover your outstanding loan. In addition, refinancing can offer you the better interest rates (do your homework that which bank is suitable for refinance loan or offer the lowest interest rates) and can also help to switch your current loan type and terms. (fixed or flexible)
Ⓑ Take Advantage of Your EPF Savings
Every Malaysian should have a EPF savings if they’re employed by any companies. You have to fully understand what EPF is use for. EPF savings is not your retirement fund only, but it can also allow the contributors (if you started to pay for EPF, you’re officially as EPF member) to withdrawals from second account to pay off your home loan.
In another way, you can also withdraw a little amount to reduce the borrowed amount. This method can helps you to reduce your monthly installments and not affecting your retirement fund, so, don’t worry about it. For your information, you can also use your second account from EPF savings to help your spouse to pay-off the mortgage loan.
Ⓒ Rent Out The Extra Empty Room (if all the rooms are occupied, just skip this method)
If you have an empty room, you can consider to rent it out to earn extra income. This tips can help you to reduce your burden on loan repayment by collecting rental with tenant. In addition, you can charge a higher rent (reasonable) if your house is in a major city/town, or nearby college/ university/office building.
Besides, all the things you need to do is clean up the room and provide the simple amenities such as water-heater, fan/ air conditioning and washing machine. This facilities are enough to attract potential tenant to look at your room.
Other than that, you should be aware of renting the room to a complete stranger. When you’re searching for potential tenant, you may try to reaching out to your friends or relatives first. Or else, do check on the tenant’s (stranger) background such as asking for references, employment details and etc.
Ⓓ Cut Down The Unnecessary Expenses
If you’re facing shortage of cash flow, it is advisable to cut-down the unnecessary expenses temporary. Such as;
- Satellite TV subscriptions. For example, Astro, you may unsubscribe its package temporary until your cash flow turns positive.
- Downgrade your internet or mobile data. For example: 10GB downgrade to 3GB. I understand that many people will gone crazy if their life without internet/ WIFI, so downgrade the internet/mobile date seems like a best choice for you.
- Ignore the fancy stuffs temporary. For example: branded shoes, handbag and cloths. Put these things down temporary as you’re currently facing financial difficulty. Only buy those things if your cash flow turn positive.
Alternatively, you can sell off your belongings that still in good condition such as clothes, handbags, books and etc. And you can find a part-time job to sustain your financial needs in short period of time.
Ⓔ Sell Out Your House (If the above 4 tips are failed)
If all the above tips are failed after you tried, unfortunately to tell you that you should consider to sell out your house to limit the effects of defaulting on your housing loan. Should you have been making monthly repayments for some years, says 5 years, there is some equity should has been built on your house. It can helps to reduce the outstanding amount and can also avoid Real Property Gains Tax costs (generally known as RPGT), if you’re making profits of over 10% or RM 10K, whichever the lesser.
By sell out your house, you may gaining from it at the same time. So, be wise to use those balance amount and buy again at a later time. So, don’t be upset about it.