Buying a house with a mortgage means you must fulfil monthly financial obligations. Life can sometimes present unpredictable circumstances beyond our control, such as unexpected job loss. If you ever wonder how unemployment affects mortgages and what to expect in such scenarios, this article can help answer your questions and remove some doubts.
In short, if you can manage monthly payments with savings, assets, the help of your partner, or unemployment benefit, you can continue residing in your home without significant disruptions.
If you cannot afford your monthly payments, you should inform your mortgage lender about your situation. Mortgage lenders are often willing to work with you and consider your case with understanding and flexibility. For example, you may be allowed to postpone the monthly payment or pay at a lower cost for a certain period to get through the hardest time.
The NHG safety net is made for situations like divorce and unemployment. If your current mortgage is with NHG coverage, you can benefit from a set of safety measures. First, you can use the housing costs facility (WLF) to reduce your monthly costs to bridge the difficult period. Second, if you are forced to sell your home, the possible residual debt can be waived under certain conditions.
However, if you can no longer afford the monthly payment, you face the danger of a forced sale. In this case, the lender forces the borrower to sell the property to repay the mortgage. The borrower is left with a residual debt if the house value is low and insufficient to pay off the mortgage.
You have no changes to get your mortgage approved if you are unemployed. Banks prioritize ensuring that you can meet your monthly financial obligations with high certainty.