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Home Page > Finance > Debt > Mortgage Arrears or Difficulty with your Payments?

Mortgage Arrears or Difficulty with your Payments?


Difficulty With Payments

time_running_out.jpgAre you struggling with your mortgage repayments or you're worried you might fall behind, contact your lender as soon as possible as lenders have procedures for tackling payment difficulties and they'll try to help. Today Mortgage lenders are keen to help their customers sort out any payment difficulties. Also, the law says they must treat you fairly and take your circumstances into account. They may be able to come to a payment arrangement with you. You can also get free independent advice from other organisations.

If you are struggling with payments speak to your lender about doing one of the following:

 - reduce your payments for a set period

 - charge you interest only for a while, if you've got a repayment mortgage (usually you pay capital and interest) 

 - give you a 'payment holiday' 

 - extend your mortgage term to reduce your payments

In Arrears  

If you've already fallen behind, your lender will suggest a way to pay off the arrears gradually, alongside your usual payments. If you can't meet the extra payments, you may be able to delay them for a while or add them to your loan. This usually depends on your track record.

It is really important to pay as much as you can manage every month. Keeping up regular payments (even if they vary) shows that you're committed. Your lender's more likely to treat you sympathetically and you'll minimise the arrears charges too.

Important  - The Financial Service Authority (FSA) regulates that most mortgages taken out on or after October 31st 2004 that lenders must treat you fairly and send you regular statements to keep you informed about your current arrears position. There are also rules covering what the lender must do if it intends to repossess your home.

It's very important that you don't ignore any payment problems. Mortgages are 'priority debts', which you should pay off first as your lender could repossess your home and sell it to get their money.
Your lender can help you work out how much you can afford, but you may prefer to do this yourself. A good starting point is to write down all your income and outgoings (apart from the mortgage) and see what you've got left. The Financial Services Authority (FSA) has an online budget calculator you can use on Money Made Clear.

If you've lost your job or can't work because of illness you might be covered if you've taken out 'mortgage protection insurance' to cover your payments. The insurance payments may not start straight away - so contact your insurer as soon as possible.

It's also worth checking if you're entitled to benefits such as Working Tax Credit, Child Tax Credit or Council Tax Benefit.  They can make a real difference to your income and help with your mortgage payments. More inforamtion is avaialble form the Govenement website www.direct.gov.uk
 

Mortgage Shortfall after Repossession

If your lender repossesses your home, they will sell it to get back the money you owe them. But if it sells for less than you owe them, they may want you to pay back the rest of the debt (the 'mortgage shortfall'). This is no longer a 'priority debt', which means your lender can't claim any more of your possessions or assets. But they can try to recover the debt for a long time - up to 12 years. Contact the National Debtline for advice about what to do if you're being asked to make up a mortgage shortfall. Check the National Debtline Website.




 
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