Suspension of mortgage loan: what is it?
If the signature of a home loan offer commits the borrower over several years, the more or less temporary difficulties of life can impact the repayment in due time of the deadlines. However, the borrower can request a suspension of his mortgage. What does this option consist of? What are the alternatives?
In France, obtaining a fixed-rate, variable or mixed-rate mortgage requires the signing of a contract that commits the borrower or the borrowers over several years. However, the future is still uncertain, many life difficulties more or less temporary (divorce, illness, unemployment) can affect the repayment of monthly payments. In this case, to avoid failures in the repayment of deadlines such as the refusal to levy or payment incidents, credit holders often have the option to suspend their home loan. However, suspending one’s real estate loan is simply to obtain a deferral of the maturity of one’s outstanding assets for a certain period (the grace period). This is a clause available in most flexible loan agreements. Nevertheless, not all lenders are proposing the suspension of housing loans. Therefore, it is imperative to verify that this clause exists in its loan agreement before making a request for suspension of real estate credit with its lending institution. Namely that this clause does not concern all types of credits, including subsidized or regulated financing such as: zero-rate loans, contracted loans or loans for social accession.
What are the alternatives to the suspension of mortgage
The suspension of housing financing, whether partial or total, may have an impact on the initial cost of the contract. In fact, this suspension of a few months or years inevitably entails an additional cost on credit since repayments and unpaid interest in turn generate other interest and other costs (insurance premium, guarantee costs). Thus, the suspension of mortgage loans may have disadvantages and must be requested with the greatest care. However, you should know that there are alternatives to this clause. First, if possible, opt for a flexible credit that can adjust the amount of its maturities up or down rather than suspend it for a certain period. This solution is much cheaper, since the borrower will continue to pay a portion of the outstanding principal and interest. Then there is the solution of the repurchase of mortgage. The latter consists in substituting its current housing loan with a new loan with a reduced monthly payment and adapted to its real repayment capacity. Under certain conditions, the purchase of real estate loan not only allows the borrower to recover a healthy financial situation, but also to avoid significantly increasing the initial cost of his contract. This banking operation also makes it possible to opt for a fixed rate, a variable rate or a mixed rate depending on its projects. It also makes it possible to choose a flexible contract or to renegotiate the conditions of its insurance-borrower.