Not everyone has the opportunity to become the owner of real estate, paying the entire cost in a single payment.
Very often buyers are forced to use mortgage loans, lasting at least ten years. For such a long period, even the most conscientious lender may find himself in a situation where loan payments will turn into an unbearable financial burden. At that point, the question of what to do about the debt to the bank will become the top of the list. Overdue mortgage will undoubtedly lead to the accumulation of debt, the growth of penalties and other expenses. To begin with, you need to notify the lender of your problem and provide proof of insolvency.
Bank's assistance
Recognizing the borrower's arguments as valid for cutting or suspending loan payments, the bank may offer the following options:
Credit vacations
By mutual agreement, during this period the debtor may pay smaller amounts or suspend debt repayment altogether. Some Cypriot real estate developers negotiate payment vacations with their banks in advance. In this case, the unpaid interest is added to the body of the loan, and the amount of financing, after the end of the grace period, increases. The total term of the loan is increased for the duration of the vacation, and the reimbursement of the overdue amount is postponed to the final stage of the process. It is important to remember that during the mortgage vacation period, interest continues to accrue on the loan body. Thus, the final overpayment on the loan will increase, but the credit reputation of the borrower will not suffer. 
Restructuring
Changing the terms of an existing loan in order to reduce the financial burden on a debtor in a difficult situation. Practical solutions in this case are as follows:
- Reducing the amount of monthly payments and increasing the term of the contract;
- changing the schedule (frequency) of payments;
- authorization to pay only interest for a certain period of time without taking into account the principal debt.
Refinancing
This is an opportunity to repay an old loan with a new one. The client can get a loan from the same or another bank on more favorable terms, for example, with a low interest rate or a longer repayment period.
Loan insurance
If insurance against job loss or other adverse factors was taken out at the time the mortgage contract was concluded, it can be a good safety cushion and ensure payments during a difficult period until the financial situation of the debtor stabilizes.
If none of the above methods leads to an improvement of the situation, the mortgage-burdened property, at the initiative of the user, is put up for sale in the same way as a normal one. To do this, the seller needs to receive confirmation from the lender, and the buyer of the property sends a request to the bank to close the loan. At the same time, depending on the agreement, the new owner can pay it off at once or pay it off monthly.
Confrontation with the bank
Having not detected the next payment, the bank employees are still favorable to the borrower, but try to find out the reasons for violating the terms of the loan agreement. The client may receive both paper notices and phone calls. If the debtor deliberately fails to contact or evades repayment of the debt, the bank has the right to make demands for early repayment of the debt. In addition, the debtor is transferred to the category of unreliable, which will significantly spoil his credit history. At this stage, the bank, as a rule, will take measures for out-of-court debt collection.
If the borrower continues to ignore the requirements of financial workers and avoids contact with them, the mortgage debt can be sold to collectors. In such a case, there is a change of creditor. It is possible to transfer the authority to collect debts to a collection agency without a debt sale transaction. Then the bank retains the status and rights of the creditor, and collectors only provide services for the return of borrowed funds.
Long-term and deliberate default on loan obligations threatens the borrower with loss of real estate. In the Republic of Cyprus, the tipping point comes after four months of non-payment, which is a short period compared to other EU countries. Back in 2014, laws were passed to speed up the foreclosure process, giving Cypriot banks the ability to sue in court.
The court will give a verdict on debt collection if it finds the borrower guilty of violating the terms of the contract. On the basis of the writ of execution, the bailiffs will take over the case, whose task is to return the debt to the lender. In case the property is put up for auction by court order, the proceeds are used to pay penalties, interest payments and the loan itself. In Cyprus periodically operates a moratorium on the sale of mortgaged property, but at the moment it is canceled. It should be said that this ban negatively affects the credit rating of the country.
Tips for the debtor
In the current situation, the borrower should not bury his head in the sand and expect that the problem will resolve itself. The first thing to do is to bring to the attention of the bank's credit department the reasons why it is difficult or impossible to repay the debt. It is not recommended to ignore calls and messages from the creditor. They may well contain good news. The borrower should evaluate the possibility of repaying the interest only until his financial situation improves. In this case, the monthly payments will decrease, and you will have to catch up later.
If the bank is not willing to support its client, the latter can raise the issue of an official and immediate withdrawal from the deal. Such a move does not release from the payment of the debt, but may force the creditor to reconsider the approach and establish a constructive work with the penalized person. It is critical to let bank officials know that they are not serving as a tool of expropriation and taking away a borrower's property should be the last thing they do.
The decision to buy a house or an apartment using a mortgage loan should be balanced and coordinated with a specialized lawyer. It is advisable to make the down payment as much as the current financial situation allows. Finally, credit housing can be rented out, which will help the owner to get out of debt.
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