House prices fell sharply in the period from 2008 to 2012. In addition, the economy has entered a dip. This combination of factors is causing an increasing number of mortgage payment arrears. In a healthy housing market, mortgage payment arrears are less common. As soon as the house is no longer financially viable, it can be sold. Houses with a mortgage that is higher than the value of the house are unsellable. The house cannot be sold and the monthly costs can no longer be met. If house prices continue to fall, the problems will be further exacerbated.
Mortgage debt greater than house value
Falling house prices and mortgages that are not paid off during the term form a dangerous combination. The mortgage debt remains at a maximum and the collateral becomes less and less valuable. From 2013 it is mandatory to repay the mortgage during the term. This results in higher monthly costs, but repayment also has advantages. Homeowners are more resistant to declines in value. At the end of 2012, house prices had returned to 2004 levels. This means that everyone who bought their house after 2004 had an undervalue in their house at the end of 2012 instead of an excess value.
Difficulty paying the mortgage costs
According to the BKR, at the end of 2012, approximately 76,000 homeowners had difficulty paying their mortgage payments. Calculated over a period of four years, this has more than doubled. It is expected that house prices will continue to fall in 2013 and 2014. As a result, the number of payment arrears is expected to increase further. This will certainly be the case if the economy does not recover during this period. Increasing unemployment will ensure that more and more homeowners will no longer be able to meet their mortgage costs.
Contact the bank if you have payment problems
Homeowners often sound the alarm too late. Once months of arrears have already built up, you no longer need to ask the bank for help. As soon as you are in danger of falling behind in your monthly payments, you must immediately contact the bank to find a solution. The bank also benefits from the fact that you do not fall further behind in paying the monthly obligations.
Temporarily lower monthly costs
You can make an agreement with the bank about temporarily reducing the monthly costs. The deficit will be added to future installments. In order to make a payment agreement, there must be a prospect of better financial times. For example, you will pay less in mortgage interest for six months, and then you will make up the deficit again in the following year. It is important to keep the bank informed as soon as the arrangement can no longer be met.
Several months behind in payment
In certain cases, the only solution is to sell the house through a foreclosure auction. This yields considerably less compared to the regular sale of the house. The result is that in practice there is often a large residual debt left behind after the sale of the house. If the mortgage has been taken out under the conditions of NHG, the residual debts will be included in the guarantee scheme under certain conditions.