Mortgage Payment

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Mortgage Payment

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In a mortgage contract, it is a common practice that a mortgage payment arrangement is agreed upon by both the mortagor and mortgagee is set up in installments.

These installments are usually paid monthly.

However, there are other terms and conditions that allow a more lenient payment scheme like a payment in bulk every six months or so.

Regardless of the payment arrangement, there are still times when a mortgagor is unable to pay his or her mortgage debts due to financial difficulty or perhaps because of an erratic source of income.

When this happens, either he or she will have to pay interest for the failure to comply with the mortgage contract on time or worst, he or she will have to pay everything at once due to an acceleration clause.

Hence it is of great concern for many mortgagors to avoid having mortgage arrears.

Unfortunately for many, mortgage arrears usually lead to foreclosure. This means that a person loses his house, car, or other property that is the subject matter of the mortgage contract due to foreclosure.

Foreclosure is the worst thing that a mortgagor seeks to avoid. It deprives the mortgagor of his or her property and causes a lot of work regarding the legal aspects of the mortgage.

Hence, many people who are late in making a mortgage payment against their loans resort to borrowing money from other sources.

The downside to this however, is that only few entities are willing to lend money or extend loans to people in this situation.

This may be attributed to the fact that there is a high risk that a person guilty of a late mortgage payment may be in some sort of serious financial difficulty and hence the late repayment that is due on the loan.

Even if the people affected by the late repayments are able to acquire some kind of bridging loan, they usually acquire it with a much higher interest.

Thus, it is advisable to try to pay your arrears first by allocating more of your extra income for debt repayment before resorting to acquiring other loans.

In cases where one does not have any other prospective source of income, he or

she can resort to a so called arrears mortgage.

In this type of mortgage, a mortgagor who still has unpaid mortgage loans in an existing mortgage contract will acquire another mortgage contract so that he or she can pay the arrears in the existing mortgage contract.

This is the best option for a person who has no other prospective source of income to pay his or her existing mortgage loans.

This will also prevent the unfavorable effect of an acceleration clause, which makes the whole amount of the debt due upon default in the payment of the installments. Hence, one may prevent foreclosure by resorting to this method.

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