What To Do If You’ve Missed A Mortgage Payment

What To Do If You’ve Missed A Mortgage Payment

The recent lack of affordable mortgage deals means that many people are struggling to meet their mortgage payments, especially those who’ve been on long term discounted deals which have now expired. In such situations, where the mortgage reverts back to the lender’s Standard Variable Rate (SVR), the amount you have to pay can easily leap up by several hundred pounds a month on the average mortgage.

Increase In Missed Mortgage Payments

Not surprisingly, more and more people are beginning to miss payments and get into mortgage arrears, which is the first step along the road to having your home repossessed. That’s probably one of the worst financial disasters that can happen to a homeowner, especially if the plummeting housing market means that you’re in negative equity.

Contact Your Lender Straight Away

This doesn’t have to mean though that repossession is an inevitable consequence of missing mortgage payments, but the situation is definitely serious and needs to be taken care of – and this means that you MUST contact your mortgage lender as soon as you realise that you’ve gone into arrears or are about to.

Although it’s a daunting prospect to phone your mortgage lender and admit that you’re in trouble, the stakes are too high to simply ignore the situation, and silence on your part will not make your lender any more sympathetic to your problems – indeed, quite the reverse.

Options To Clear The Arrears

Contacting your lender immediately gives you the opportunity to come to an arrangement with them about how to resolve the arrears. This could mean a refinance package (less likely these days than in recent times), a restructuring of payments to spread the arrears over several future payments, or even simply extending the term of your mortgage to make up for the missed month or months.

Interest Only Mortgages

If you’re struggling with your budget, none of these options may be appropriate. What might be a better option is to ask your lender if you can temporarily shift to an interest-only mortgage, which can lower your monthly bill dramatically and give you time to get things back into shape.

Repossession Is A Last Resort

It’s always worth bearing in mind that your lender doesn’t want to repossess if they can avoid it – it’s a lengthy and expensive process, with no guarantee of clearing the debt in the end anyway, and so by contacting your lender early on at the onset of problems, you’ll be giving them every chance to avoid the issue escalating, which should be the aim of both parties involved.