Mortgage Arrears | Need HELP? Free Impartial Property Advice

Mortgage Arrears

If you have fallen into mortgage arrears then your house could be at rise of repossession, it is important to address the situation as quickly as possible and contact your lender to discuss the different options.

What will my lender do if I fall into mortgage arrears?

You will be contacted by your lender informing you of this, most do not begin court action to begin repossession until mortgage arrears have reached 3 months. Mortgage lenders also have a formal procedure of trying to rectify the situation by discussing possible solutions or suggesting debt counseling before taking a situation to court. The Financial Services Authority regulates mortgage companies to ensure that proceedings are fair.

How can my lender help with my mortgage arrears?

Lenders don’t want to repossess your property, but they need to find a way of getting the money that you owe them. Therefore if you are having problems paying your mortgage you should contact your lender to talk about the plans available. If you explain your situation your mortgage lender could agree to reduce your repayments for a set time or give you a payment holiday. If you can afford your normal payments then the arrears you owe can be paid off gradually rather than a lump sum or added to your mortgage. You could consider changing the agreement of your mortgage for example switching to an interest only loan or extending your mortgage so that although longer your monthly payments are less. Your Mortgage lender may allow you to stay in your home whilst you sell the property to pay off your mortgage arrears or they could offer you advice for government schemes that may be able to help you.

What Government schemes are there to help people in mortgage arrears?

If you are having problems with your mortgage payments you may be entitled to help from the Mortgage Rescue Scheme, this is to help people who risk becoming homeless if their house is repossessed. Homeowners on benefits may be entitled to get help towards the interest on their mortgage from Support for Mortgage Interest, which began in January 2009. Although there are no government schemes to help homeowners with problems with their capital repayments, it is worth checking if you are entitled to other benefits such as working tax credit or child tax credit which would increase your income.

How can I avoid falling into mortgage arrears?

Your mortgage is a secured loan and therefore it should be your priority. Even if other lenders or creditors are more demanding, you should pay your mortgage first. It is also important to work out how much you can afford to pay every month, you can do this by looking at your income and outgoings and get advice from your lender or a money adviser. Finally if you are still struggling there are free, independent organizations that can give you advice about managing your money and avoid falling into mortgage arrears.

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