Due to quarantine, many have lost all or part of their income. What if, in such a situation, there is no way to repay a mortgage or a consumer loan?
We have chosen several options, where to get the money from and what banks can offer.
01. Seek Restructuring:
If you are entirely unable to cope with payments, then contact the Bank with a request to review the terms of the loan. It is called restructuring. The Bank may, at its discretion, reduce the interest rate on investment, lower the monthly payment, or write off already accrued fines and penalties.
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For the Bank to meet it, the borrower must have an objective reason not to pay debts – a difficult life situation. For example, if you lost your job, went on maternity leave or leave to care for a child, became seriously ill or injured, and temporarily cannot make money. The reason will have to be proved by documents.
02. Take a credit vacation:
It is a temporary deferral of loan payments. In America, there are now two types of credit holidays: “new,” which introduced in connection with the spread of coronavirus, and “old” – mortgage. Both of them act in the same way: the borrower chooses the deferral period (holidays cannot last longer than six months), you can start repaying the loan again – partially or on schedule – at any time.
New Credit Vacations
“New” holidays apply to the consumer, mortgage, and car loans, which issued until April 3, 2020. To take them, you must observe three conditions simultaneously.
- The size of the loan must not exceed the maximum possible by law. For mortgage loans – 2 million $ (in Moscow – 4.5 million $, in the Moscow Region, St. Petersburg and the Far Eastern Federal District – 3 million $), for car loans – 600 thousand $, for consumer loans for private entrepreneurs – 300 thousand $, for consumer loans for individuals – 250 thousand $, for credit cards for individuals – 100 thousand $.
- A month before applying to the Bank for a loan vacation, the borrower’s income should have decreased by 30% or more compared to his average monthly income for 2019.
- At the time of contact, the borrower should not have a mortgage vacation.
You can get a “new” credit vacation by calling the Bank. Most likely, at the request of the Bank, you will have to send photos or scans of documents that confirm the decline in your income.
“Old” mortgage holidays
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“Old” holidays apply only to mortgages. For their design, four conditions must meet simultaneously.
- The size of the mortgage does not exceed 15 million $.
- The terms of the loan agreement have not previously changed at the request of the borrower (refinancing is not considered).
- The mortgage registered for the sole housing of the borrower (or the corresponding right of claim under the equity agreement).
- At the time of requesting a mortgage vacation, the borrower is in a difficult life situation: no job; temporary incapacity for work longer than two consecutive months; average monthly income fell by 30% or more two months before applying to the Bank (at the same time 50% of revenue and more are spent on mortgage payments); the birth of a child (in this case, the average monthly income fell by 20% over the last two months, and over the past six months more than 40% of revenue is spent on mortgage payments).
You can apply for the “old” holidays in person at the bank office or by registered mail.
3. Take advantage of the help of the Bank
Some banks offer special programs for customers who cannot cope with loan repayments due to the situation with coronavirus. We found several examples in the most significant American banks.
The Bank has a program for customers who have suffered because of the coronavirus: they become ill, are in quarantine, partially lose their income or have difficulty repaying loan payments.
For mortgages and consumer loans – without limit on the amounts – you can take a deferral for a period of up to 6 months (if desired, it can increase to 12 months). The Bank can provide a new consumer loan to credit card holders due to it. And a credit card will be closed. USAA Routing Number The new investment will be deferred for up to 6 months. During this period, the client must pay 30% of the accrued interest.
To get a vacation, you need to submit an online application to the Bank and attach photos or scans of supporting documents to it.
04. Refinance loans:
Loan rates are now at historic lows. Compare the price on your loan with the average interest on similar loans at banks. It can do in the loan calculator on our website ( mortgage, for consumer loans, for car loans ): enter the loan amount, term, and necessary conditions.
If banks offer more favorable rates for similar loans, it may be time to refinance your mortgage. In essence, this means taking a new loan under a particular program at a lower rate. The monthly payment will decrease, and it will be more comfortable for you to repay the loan.
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Keep in mind that you have to consider several conditions:
- Banks rarely refinance loans of their borrowers, so most likely, you will have to apply to a new bank.
- There should not be any delays in loans – refinancing is available only to disciplined borrowers.
- The borrower must make at least six payments under the current loan before refinancing.
- Banks can put forward their conditions – for example, buy insurance, make an apartment appraisal, or pay a commission.
05. Borrow money:
If you need money urgently, you can try to borrow it from relatives or friends. Important: do not spoil the relationship if you refused.
To ensure that you will return the money and do it on time, offer to write a receipt. In it, you need to indicate your passport data, amount (in numbers and words), repayment period, the interest rate for which you take a loan, date, and signature. Keep in mind that such a receipt will have legal force – if you do not return the money, they will be able to sue you. If you understand that you do not have time to return the money on time, try to negotiate, and be sure to write a new receipt.
06. Receive allowances and benefits:
The state has come up with measures to support specific categories of citizens affected by the situation with coronavirus.
- Increased unemployment benefits – up to 12 130 $ per month. If the unemployed have minor children, then he will automatically add to the allowance 3 thousand $ for each child. Muscovites, who managed to work out 60 days in 2020, will receive 19 500 $, residents of the Moscow Region – 15 thousand $. Benefits are available only to official unemployed – those who registered on the labor exchange.
- They elevated sick leave. By the end of the year, temporary disability benefits will be no less than the federal minimum wage – 12 130 $ per month, regardless of the length of service of the employee.
- Benefits for children under three years old – for families who have the right to maternity capital. The allowance will be 5 thousand $ per month per child and will be paid for three months: from April to June. You can apply until October 1.
- Failure to pay utility bills will not charge fines and penalties. Services for non-payers themselves will not be disabled. The relaxation will last until January 1, 2021.
- Homeowners in Moscow and the Moscow Region will not pay capital repair fees until June 30, 2020.
07. Use job loss insurance:
Perhaps when you took out a loan, you took out insurance against loss of work. It’s time to use it.
Before contacting the insurance company, carefully read the contract: look at the list of insured events and exceptions, the terms of payments, and compensation. So you will understand what documents the insurance will ask you and how exactly payments on loans will compensate.
08. Find a new job:
Under the conditions of coronavirus, some companies lost customers (and, consequently, payment for employees), while the other part experienced unprecedented demand. These are the professions most in order by employers now.
09. Find a side job:
If you still have work, but at the same time you have lost all or part of your income — for example, the organization went idle, you sent on vacation at your own expense, or your salary cut — you can find a temporary part-time job.
Think of your hobbies: you can sew custom-made, for example, reusable masks, sell handicrafts through online bulletin boards, groups on social networks or sites
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you can find tasks to perform for payment.
If you have any useful knowledge, share it with others: take on training people on Skype. For example, hairdressers or manicurists can teach customers how to care for their hair or nails on their own; those who know how to play musical instruments, draw or embroider can find an audience of interest; and people who know languages or school subjects well can educate children in isolation and help them (and parents!) with their homework. You can find customers on the same YouDo, Avito or Yule, or place an ad on your pages on social networks – your first friends or friends may become the first customers.
10. Take money from the airbag:
It is a cash reserve, which should be enough for 2 – 3 minimum payments on loans, and better – more. Ideally, such savings should make to everyone who draws up bank loans. The airbag should keep in relatively easy access: it can be money on a deposit, savings account, debit card with a percentage of the balance of cash in dollars. It can spend only in emergency cases – for example, if you have lost your job or become very ill.
We understand that if you now have nothing to pay for a loan, then you most likely do not have an airbag. But remember this rule in the future: credit cannot take without a reserve for several minimum payments.