What are the effects of the construction loans?

By law, the bank should use all available legal means to recover the debts and is obliged to report to the Credit Bureau the delays in the payment of rates of the construction loans. Once registered, these will be kept in the history of the credit report for four years.

Most financial institutions which offer construction loans check the history at the Credit Bureau in order to their grant. Thus, there may be three main effects of the registration to the Credit Bureau, even if you are only joint debtor, guarantor:

1. The greater the delay, the more the chances to benefit of a construction loan will decrease in the coming years.

2. If you want to get a loan, it could be more expensive.

3. You will not receive promotional offers of the bank or the increases of the credit limits offered to customers who pay on time every time.

It is important to inform the bank about changes of address and phone number. Thus, you can go to any agency with the identity card to ask for the change of the contact data. The update of your data is useful to be informed by telephone, SMS or letters about: new offers of the bank, delays in payment, solutions provided to customers with problems at the repayment of the construction loans and other useful information. It’s also important to become familiarized with Home Equity Loans.

In the delays in payment, the bank may use the services of the specialized collecting agencies and / or other ways of recovering the construction loans amicably (home visits, written notification to the addresses of the debtors and so on). Also, if the amicable recovery attempts do not work, it can opt for the initiation of the process of the forced execution through a bank executor or bailiff.

The credit agreement is the enforceable title and on it, can be watched all movable and immovable properties (for example, the car, the house) of the borrower heritage/ joint debtor, both present and future, until the payment of all debts to the bank. In case of forced execution of assets, sales publications are made ​​public and posted including through local or national newspapers.

Another effect of the multiple delays is the penalties that are accumulating for each remaining rate, constantly increasing the amount of debt and making it harder to be paid. The bank may declare the due date loan in advance and in this case the client is obliged to pay full construction loan, not only the due date rates, which generates an immediate considerable financial effort.