If the real estate loan can no longer be paid, in the worst case the forced sale threatens. Whether and how this can be avoided depends very much on the circumstances and the lender. One should ask oneself therefore already before exactly: What happens if one does not pay the credit installment? The von Lutzow real estate experts reveal it to you in this article.
House loan can no longer be paid
The own four walls, the dream of many people. In order to be able to fulfill this as quickly as possible, a real estate loan is often resorted to in this case. As long as everything goes according to plan, no problems arise here. However, if unforeseen events occur, such as the loss of a job, the borrower quickly finds himself in an unpleasant situation.
In this case it applies to act briskly, so that no foreclosure of the real estate threatens. In most cases, the bank as the lender issues a mortgage loan. This results in a land charge entry in favor of the bank in the land register. Thus the bank is practically the owner of the real estate, until the credit was completely paid off and if necessary the land charge entry was changed. The whole thing therefore acts as collateral for the bank, should the borrower no longer be able to repay his installments.
For this reason, the bank is also able to initiate a compulsory auction of the property in the worst case scenario. So that it does not have to come to it, ways should be introduced immediately, in order to clarify the circumstances.
Talk to the bank about the real estate loan
Should the case arise that the house loan cannot be financed further, it is recommended to first talk directly with the lender. If it is only a short-term payment shortage, the bank is often willing to find an individual solution for it. For example, it is conceivable that the house rates are lowered or even temporarily suspended completely.
However, smaller banks in particular are often more accommodating towards the customer and seek personal discussion. How the final agreement ultimately turns out depends mainly on the financial situation of the borrower and the responsible officer of the bank.
However, if the real estate loan cannot be financed in the medium to long term, the debtor faces unpleasant consequences.
Threats of foreclosure if the real estate loan is not affordable
If no talks with the bank have taken place in advance or no agreement has been reached, the debtor’s private possessions are usually threatened with foreclosure.
So that the outstanding house installments can be collected nevertheless, the bank is, often even without complaining, entitled to order the execution. Should the income from this not be able to cover the required amount, in most cases there is no alternative but the actual foreclosure of the property. Since the bank holds the land charge entry, this right is incumbent on it, which is also enforced in extreme cases.
In this case, the property is publicly offered for auction. This requires a court ruling, an entry in the land register and a bailiff. This is responsible for the execution of the actual auction of the house. The highest bid on the spot is taken as the selling price. To the conclusion of the auction it comes with the well-known words "To the first, to the second, to the third!". This is to give other bidders the opportunity to bid at the same price.
Notice of forced sale in the land register
If the court determines the forced sale, this must be registered at the same time in the land register. For this purpose, the court notifies the responsible land registry office and asks for a corresponding notation. This is to prevent that the borrower after the judgment of the foreclosure can not initiate dispositions of the property. Otherwise, this could otherwise have negative consequences for the lender or the new buyer.
The proceeds of the auction go primarily to the bank for the outstanding installments of the home loan as well as their expenses. If there is anything left over, it goes to the borrower. However, it often happens that even in spite of the forced sale of the property, the entire amount due to the bank has not yet been settled. Under these circumstances, the missing difference is of course additionally demanded by the lender, which often threatens private insolvency.
Alternative: Early house sale
The prospect of a compulsory auction and the associated inconvenience is not particularly pleasant. On the one hand, this can turn into a long, grueling process for the debtor, and on the other hand, the sale price achieved is often well below the actual value of the property.
As soon as it is foreseeable that in the medium term the house loan can no longer be paid, immediate action should be taken. On the one hand immediately the discussion with the bank should be looked for, on the other hand the real estate directly for the sales is offered.
The house should be offered for sale immediately after the insolvency has been determined, even before the bank has to apply any coercive measures. In this way, a much better price can usually be achieved than through the already threatening foreclosure sale.
Thus, the house must also be abandoned, but at least the borrower has a much better chance of a higher proceeds after the sale of the house.
Because it becomes particularly treacherous, as soon as the note of the forced sale stands in the land register. This usually has a noticeably negative effect on the sale price of the house.
Use therefore this knowledge advantage and let your house free of charge by a real estate expert evaluate.
If one should come into the unpleasant situation and the real estate loan can be paid no longer, it applies to proceed thoughtfully. The creditor should definitely be the first person to contact in this case. From the discussions with this, as well as comprehensive calculations, it is then decided how to proceed. If there is no prospect of creating sufficient liquidity, even with a possible forced sale of the private property, there is almost always the threat of the house being auctioned off.
So far one should not let it come and act in time. Since the real estate must be given up in that case, it applies to use the temporal advantage. Even before a corresponding note is entered in the land register, it is advisable to offer the house for sale. In this way one secures oneself usually a clearly more attractive price.
Real estate agent Potsdam, Zossen, Konigs Wusterhausen and surroundings
If you have any questions about this article, please contact us directly. The von Lutzow real estate experts are available to answer any questions you may have.
If the sale of the property is an option for you, please contact us. Our service for you as an owner: If you are planning to sell or rent out your property, it is very important for you to first know its market value exactly. Have the current value of your property professionally appraised by a DEKRA expert for real estate valuation free of charge and without obligation.