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Mortgage Arrears

What should you do?

Most importantly, do something now because the problem won’t go away. The sooner you talk to your mortgage lender the better. They will need to know if there are specific reasons causing the arrears and why you cannot make the payments.

Contact your Mortgage provider for help

All mortgage firms regulated by the FSA have to take into account the circumstances of their customers and treat them fairly. If you are in arrears the lender will have set procedures for dealing with your case. Contact them and ask them for help.

Get Advice

Contact an agency that deals in giving this type of specialist advice and ask them for their independent advice. Very often they can help you reach a solution. Check out some of our links for further details

Personal Budget

List your monthly expenditure. Be honest with yourself and list

everything. This will help you to identify where your money is going, from here you can identify areas of your budget where you may be able to make some changes or savings

Pay as much as you can

Even if you cannot make your full monthly mortgage payment it is

important to pay what you can. Your mortgage lender will be more

sympathetic if you show that you are making an effort to minimise the problem

Consider changing the way you repay your mortgage

If you have a repayment mortgage and your difficulties are relatively short term then you could ask your lender to accept payments on an interest only basis until your circumstances improve. You will not be paying anything off the capital amount while you are paying interest only so you will have to make up these payments at a later date.

Tell them what you are doing

Your lender will respond better to your difficulties if they understand the action you are taking.

Avoid Loans to repay Debts

Try to avoid taking out loans to consolidate your debts, these loans are often very expensive and are more than likely going to be secured on your property. This increases the risk of you losing your property through non payment of instalments. If you are thinking about taking a loan make sure you take impartial advice before you take this step.

Handing your Keys back

If you can’t afford your mortgage and you don’t see your circumstances changing think very carefully before handing the keys of the house back to the lender. You are still responsible for the mortgage until the house is sold and the mortgage is redeemed. In these circumstances it is not unusual for the property to be sold at a discount in order to sell it quickly. Worse still, if the property is sold at auction there is a strong chance that it will be sold very cheaply. In these circumstances you may find yourself in ‘negative equity’ where you still owe money on the mortgage even after the house has been sold. You will be responsible for clearing this debt and it may take many years to do so.

What can you do to pay off your mortgage arrears?

Start paying off the arrears as soon as possible It is important to make a start on paying the arrears as soon as you can as the arrears will attract extra charges.

You can arrange to pay extra on your monthly mortgage repayments but make sure it is affordable and sustainable. Even if your mortgage lender is unhappy with the amount you are offering pay them anyway.

Swap to a new lender

There are a number of lenders who will give you a mortgage even with current arrears. You will need to have some equity in your property and the interest rate will be slightly higher, however, your new mortgage will clear your arrears and you will be able to start with a clean slate. For more information view our page links.

Alternatively you can ask your lender to capitalize your arrears. This means that your arrears will be added to your outstanding mortgage, spreading the arrears over the remaining term of your mortgage. Your payments will increase and it is unlikely that your lender will agree to this if you have failed to maintain payments under a previous agreement or if your house is valued at less than your current mortgage.

Extend your mortgage term

Most mortgages are repayable over 25 years. If you have a repayment mortgage and have been paying it for several years you could apply to have the term of your mortgage extended. This would reduce the monthly repayment but you will be making them for longer so consider carefully how this will impact on you if it takes you past your retirement age.

Ask to delay paying off the arrears

If you can manage to meet your monthly repayments but can’t afford any extra you could ask your lender to allow you a period of grace before you begin to pay off the arrears.

As a last resort

If you cannot maintain your mortgage payments you could sell your home. Although this will solve your financial problems you need to give thought as to where you will live and at what level you will be able to re-enter on the property ladder.

What if your lender takes you to court?

If you have taken the above steps the chances are that the lender won’t take you to court unless the position gets steadily worse and it is clear that you cannot afford to meet your liabilities.

However, if it does, do not ignore the paperwork take immediate advice. Just because the lender starts repossession proceedings does not mean that you will automatically lose your home. Make sure that you attend the hearing and explain your position clearly along with your proposal for solution. Most courts will give you every opportunity to resolve the situation without having to grant repossession to the lender.

Whatever your circumstances Lifestyle Solution will be happy to offer impartial confidential advice. Call us on

0845 25 75 485

Or complete our call back form and we will call you at a convenient time.

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