Bank requests additional collateral mortgage – what to do?

Posted: August 15th, 2013 | Author: | Money

Changes in real estate values occur in a variety of cases, they are sometimes quite rapid and substantial. It could be that the value of the mortgaged property will be considerably less than the amount of the debt. In this case, the bank may ask us additional collateral for the loan. We, however, do not have to put up with it and we can appeal this decision, it does not mean that any day will come to us bailiff and demand the debt.

an untrained eye / photo on flickr

an untrained eye / photo on flickr

The first thing you should do is to find an agreement on the loan and read it carefully, especially the part on additional security. It may happen that the bank will request the re-valuation of the property. However, the agreement may allow this to happen or not. If the contract does not allow it, there is no need for us to agree on a new valuation and we still need to valid initial valuation. If, however, your bank may require a re-valuation, it must figure out who has to pay for it.

If we are going to pay the costs, then sometimes it’s as fast to cooperate with the bank and offer them additional protection. This may be a family member that will guarantee such additional insurance. If the bank requires re-valuation and property values will be much lower than what we suspect and we can check it on the websites that deal with selling flats, it’s best carry out a valuation on your own. The bank must enable us to carry out such a procedure, and if the valuation of each sides is not equal, the bank has to adjust to the valuation. Otherwise, you can seek further findings in court, it should be remembered that these are our money and very often an additional cost of borrowing.

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