Defaulting: is a situation where by a borrower do not pay his/her monthly repayment or installment to the lender. A borrower is expected by the lender to back the home loan fully, if the borrower refuses to repay, or cannot afford to repay the home loan, this means you have defaulted the terms and condition that you agreed to in your home loan agreement, and if you do not pay installment in full, or on time, you will be in arrears, and when you are in arrears, you are in breach of the loan agreement. It is important for a borrower to understand the consequences of defaulting a home loan repayment fully before signing the home loan agreement.
If you experience financial difficulties, and are unable to meet your home repayment in full, contact your lender straight away, you will be asked by the lender to meet and to make arrangements to settle the arrears. The lender might be able to increase the loan term, so that you are able to pay a lower or different installment for a longer period.
If you ignore the change in circumstance and you refuse to contact your lender. You remain in arrears, the lender will start a legal process, to recover the money that it is owed, and the lender will repossess the house, and may sell it to recover the outstanding balance.
If you are in default, and you ignore the lender’s attempt to contact you, you will put yourself in a worse position, as you lose your asset, and be responsible for the costs.
Sometimes it’s better to sell the house, if you find yourself in financial difficulties. Rather than wait until you are in default, or the lender takes action against you. If you sell the house for more than the amount outstanding, you may have some money left over, once you have paid the lender. If the lender sell your house, it will be at a price to get back the outstanding amount.
If you default on your loan home loan, you will lose your house, and all the money you have paid for it to the time of default.