What If You Can't Pay Your Mortgage?
The number of people in mortgage difficulty is growing at an alarming rate, and with the worst of the job losses probably still to come, the situation is only going to get worse. Repossession is a disaster for any homeowner, but it isn't necessarily inevitable when you get into trouble paying your mortgage. In fact, the government has made it plain that mortgage lenders should use repossession only as a last resort.
Talk To Your Lender ASAP
As soon as you miss a mortgage payment, or think you're going to miss one, you should get in contact with your lender to explain your circumstances. It will help at this point if you've drawn up a detailed budget of your monthly income and outgoings, so that you have a clear picture of your finances that you can show to your lender. This will help them come to an arrangement with you, for example just servicing the interest on your loan for a time, or for restructuring your mortgage over a longer term to make it more affordable.
Whatever you do, don't ignore the problem - it's certainly not going to go away, and mortgage lenders will invariably be more sympathetic to borrowers who show they are willing to confront the problem rather then bury their heads in the sand.
Get Free Debt Advice
There are several charities and organisations who offer free, independent debt advice including help on mortgage arrears. Examples include National Debtline, Citizens Advice, and Shelter. Not only can you get valuable advice from these charities, but consulting them is also a further sign to your lender that you're taking the arrears issue seriously and are trying to sort it out, again making them less likely to rush to repossession proceedings.
Check for Government Help
The government operates several schemes for helping those in mortgage difficulty, including the Mortgage Rescue Scheme which is a way of converting your home into fully or partly owned housing association property, while allowing you to stay in it. The Homeowner Mortgage Support Scheme is aimed at helping those who've suffered a temporary fall in income. Both these schemes are planned for early 2009.
Pay What You Can
Even if you can't meet your full mortgage payments, you should carry on paying what you can. This will help stop the arrears spiraling out of control, but will also be a point in your favour if your lender does decide to pursue repossession - the court is less likely to grant an order if you show you are doing all you can to meet your mortgage obligations.
Related Articles:
- Should I Hand Back My House Keys When Facing Repossession
- Can Unsecured Debt Cost You Your Home?
- Avoid Repossession with Sell and Rent Back
- What To Do If You've Missed A Mortgage Payment
- Negative Equity
- What Are Charging Orders?
- Could Your Home Be Repossessed?
Site is for information only and does not constitute financial advice. E&OE.
