Dealing with Mortgage Arrears

In today’s economic climate, many people are finding that they are struggling to keep up with their mortgage repayments. Going into arrears effectively means missed payments, and just one missed payment will mean an individual is in arrears. One missed payment will mean the following month double the amount will need to be found to repay the mortgage company, and if this is not possible, it can spiral into a very difficult financial situation.

Communication

If an individual finds themselves in this situation, or indeed if they think they may be in difficulty, the first thing to do is to contact the lender to explain the situation. If there has previously been a good repayment history, they are likely to look sympathetically on the situation and offer some help to get the individual back on track.

Initial solutions

By contacting the mortgage lender, it may be that they can offer or more of a number of temporary solutions. The first being a payment holiday for a short period while the individual can sort their finances out. Alternatively, they may agree to reduce payments for a temporary period. A further option may be that they could extend the period of the mortgage, effectively reducing the monthly payments for the duration. Alternatively, some lenders may allow the arrears to be added to the overall mortgage to be repaid over its duration. This will of course increase the monthly repayment amount, but if the individual only had a temporary blip in their finances, it could be manageable.

Mortgage arrears and unsecured debt

Many people struggling to repay their mortgage may also have additional unsecured debt, such as credit cards, bank loans and overdrafts, which all contribute to the overall financial issue. If this is the case, solutions such as a debt management plan or Individual Voluntary Agreement may be the answer. These will allow the individual to repay affordable monthly amounts to the creditors of the unsecured debt, while freeing up additional income to go towards the mortgage.

Mortgage Rescue Scheme

If an individual really is in financial difficulty and facing their property being repossessed, they may be eligible to apply for the Mortgage Rescue Scheme. The scheme is run by the local housing association and may provide financial assistance to those who are eligible. For further information, contact the local housing association.

Repay as much as possible

In all cases, it is important to maintain regular payments towards the mortgage, even if it is not covering the total amount. This will show the lender that the individual is willing to keep up repayments and they are far more willing to take a sympathetic view. In all cases, it is important to seek advice from a financial advisor or licensed Insolvency Practitioner, who will often offer free advice. Alternatively, the Citizens Advice Bureau and the National Debtline are both excellent sources of information and advice.

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