If you’re a landlord who has mortgages on your rental properties, it’s likely that your cash flow situation is complex. You probably depend on the rental income you generate from tenants to pay off the mortgages. When rental payments are late or you do not have a tenant in one of your properties, you may suddenly struggle to keep up with loan repayments.
If this is an issue for several months, you may find yourself worried about the implications of missed payments. The following are some tips to consider when paying your mortgage becomes a struggle.
Understand the type of mortgage that you have
Understanding the type of mortgage that you have and the terms that you are subject to is paramount. You may be able to immediately decrease the repayments you are making simply by talking to your lender in certain situations.
Consider loan modification
A loan modification is a great way to free up some cash and make payments more manageable. For example, if you remortgage your home, you can gain additional cash that will help you to continue making repayments for some time, even without any rental income.
If you are unable to modify your loan and your financial situation has only been getting worse, you may want to consider bankruptcy. Bankruptcy is probably a good option if you have other significant debts that are putting a burden on your financial situation.
Maintaining a healthy cashflow is essential when renting properties. Make sure that you are always thinking ahead and that you have a contingency plan in place to deal with any cash flow issues that may arise in the future. Doing this could potentially help you to avoid foreclosure.