Falling into mortgage arrears can make people feel frightened and vulnerable, but there are ways to escape from this situation.
It’s vital not to ignore mortgage arrears however frustrating and upsetting the situation may appear. To prevent against house repossession, any issues associated with your mortgage need to be addressed as a priority.
Ideally mortgage arrears should be cleared as quickly as possible. This usually depends on the period of time over which they have accumulated and the type of mortgage involved. Remember that mortgage lenders are generally willing to negotiate how best to achieve this and so establishing, and then maintaining, contact with them is crucial.
Taking into account that everyone’s circumstances are different, it’s a good idea to explain why your payments are in arrears – it will also reassure the lender that you are both aware of and dealing with the problem.
It’s helpful to be honest about your circumstances which may have changed – for example, redundancy, illness, death of a partner, relationship or family difficulties. Revisit the small print, and check the terms and conditions of your cover for any mortgage protection insurance you may have.
If your property is currently worth substantially more than the total mortgage outstanding, your lender may allow you to repay the arrears over a longer period, dependent on your personal circumstances. Please note: this would need to be specifically agreed with your lender so you would need to contact them to discuss this.
Work out first what you can afford to pay the mortgage lender. The best way to do this is to keep a record of all your outgoings against your income.
You can find a helpful budget calculator for your income and expenditure by clicking here and visiting the Money Advice Service
We’ve listed a few possible ways of tackling mortgage arrears below – one of them might be right for you. Payplan Ltd are not authorised to give advice on mortgages and can not guarantee that your lender will accept any of the possibilities below. However, contact your lender and they can discuss these options with you in detail to make sure you are getting a solution that is right for you.
If you took out a repayment mortgage, you’ll be paying a monthly instalment of interest and capital. For a short period, your lender may accept payment of the “interest only” element, particularly if you foresee the ability to resume normal payments again relatively quickly.
If you have a good track record, your lender may agree to increase the mortgage beyond its original terms, ie, an increase from 25–30 years. This will reduce the monthly payment in order for you to make a contribution towards the arrears you have. This solution will depend on your individual circumstances and retirement age.
Below are a few ways of potentially increasing your income to maximise funds:
If you are concerned by mortgage arrears contact your lender directly as they may be able to help with a plan.
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