Repossession Arrears - What Can You Do?
When you’ve missed any mortgage repayments, or paid less than you’re contracted to do so each month, then you’re essentially in arrears.
If the situation with your mortgage arrears continues, the lender will still want commitment from you to clear the arrears as soon as possible. If you do not manage to pay off the mortgage arrears or they increase further, the lender will over a period of time seek to have you evicted from your home.
They’ll do this via an application to the courts for a repossession order. This is a serious situation which can easily and often has led to bankruptcy. Therefore it is essential to consider all options to avoid going down this route if at possible.
The important point to remember is that there is help available. We discuss the various options available to anyone with mortgage arrears and the worry of potentially having your home being served a repossession order below.
Firstly, under the FSA regulations the mortgage lender must allow you time to sort things out, but they’ll only do this if you’re in communication with them.
By definition it’s important that you’re in contact with your mortgage lender as soon as possible to discuss your situation and aim to come to a mutual agreement to progress matters. The important thing is to contact the mortgage company and act as soon as possible.
Your first option to consider is to assess your household income and expenditure and see if you can make any cost savings to reduce overheads and raise extra cash to increase income. A good way is to save money on household etc. The additional money saved can go towards the mortgage.
If you believe your financial problems are likely to be relatively short term, it may be possible to agree with your lender a reduction in the amount of your mortgage payments for a limited time.
One option may be able to reduce your monthly payments; increase the period of time over which the mortgage is repaid (which will cost you more over the long term) or ask to transfer to an interest only payments if you are on a repayment mortgage (please note you’ll still need to pay back the capital eventually)
When contemplating paying off your arrears, you’ll need to establish exactly how much you can afford to pay on top of any normal mortgage payments you should be making. You can do this best by working out your budget or by seeking professional advice.
As soon as you’ve determined how much you can afford to pay, you then need to establish how you will pay the arrears off.
This could include getting the full amount together (eg you could borrow money from friends or family); paying an amount (as discussed above) in addition to your regular mortgage repayments to clear the arrears over time.
Another option would be too arrange to have the arrears added to your mortgage balance and paid off over the outstanding mortgage term. Remember this will lead to a much larger amount to be paid back.
Alternatively you could cash in or sell an endowment policy if you have one (we would recommend independent financial advice should be taken).
These mortgage arrears are obviously a worry, but there are options as you can see.
The most very vital thing to do is communicate with the mortgage lender, act as soon as possible and get extra support and guidance where needed.
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