Mortgage Arrears Read our advice about mortgage arrears
Mortgage Arrears Guide
If you have mortgage arrears, your mortgage company will want you to clear them. If you don't clear them or make an arrangement with them, they could take action and get you evicted from your home. This allows them to sell the property and recover the money to pay off the debt.
However if the Lender that you have mortgage arrears with know that you are trying your best to clear the mortgage arrears and stopping the debt from increasing they should allow you more time to sort the problem out.
Depending on your circumstances, they should be several things you can do to sort out your mortgage arrears, but you must act quickly.
Cutting down your mortgage arrears
You will need to be able to keep up the current payments and as well make a overpayment to clear your mortgage arrears. If your mortgage arrear difficulties are only short term, you could ask your mortgage lender if they would agree to having your monthly mortgage payments cut down to just your normal monthly payment for a while and then sort the mortgage arrears out at a later date.
Or depending on what type of mortgage you have you could
Ask them to
Reduce your monthly interest payments
Increase the term of your mortgage to reduce the monthly mortgage payment cost and as the mortgage arrears to the loan.( however this will increase the mortgage interest you pay back)
Switch your mortgage onto an interest only basis reducing the monthly mortgage payment
Find a cheaper mortgage deal with another lender and this will clear you mortgage arrears and give you fresh start.click here to find out how
Reduce the monthly payments on your endowment policy for a while
Warning though make any changes to you endowment policy could leave you with a shortfall and the end of your mortgage term.
Paying off your mortgage arrears
You will need to speak to your lender and tell them why you fell into mortgage arrears and ask them to come to some agreement to clear the mortgage arrears.
Before you call the mortgage company sit down and work out how much you can afford. Work out how much money you have coming in and what your outgoings are including your other current debts remember the priority must be any loans secured on your property. It may be worth looking out doing a debt management plan if you have a few unsecured debts click here for more information
You will also need to decide how to pay off your mortgage arrears. You may have several options for clearing your mortgage arrears
Paying a extra amount towards your mortgage arrears each month on top of your regular mortgage payment
Organizing with your mortgage company to have the mortgage arrears capitalized and pay them the mortgage arrears back over the term of the mortgage
Raise a lump some by borrowing money if you can to pay back the mortgage arrears.
Remortgaging to a new mortgage lender if you can, you may be able to find a cheaper deal as well as clearing your arrears for more information click here
Increasing your income
If you are in mortgage arrears, their maybe ways you can increase your income each month giving you extra to clear your arrears. Make sure that you are receiving the correct benefits that you are entitled to. Some benefits entitle you to an allowance to pay off some of your mortgage costs.
Check whether or not your have mortgage protection insurance which will keep you from falling into mortgage arrears.
Think about taking a lodger this will give you extra income to clear the mortgage arrears. This may have some disadvantages and your may need to get your mortgage lenders permission.
You could move out of the property and rent your home out for a while again you may need the lenders permission, You need to get advice about this and also need to find somewhere affordable to live.
Once you have decided on the best option for you to clear the mortgage arrears, you need to contact your mortgage company asap and make them an offer.
Maybe write the mortgage lender a letter setting out your offer to clear the mortgage arrears. Your offer to clear the mortgage arrears should be realistic and something you can keep to. Include a financial statement on your income and outgoings and explain why you feel into mortgage arrears and propose your best option to clear them.
You need to explain to the mortgage lender that to get the mortgage arrears cleared in the way you propose would be both of your interest.
Start making extra payments to clear the mortgage arrears even if the lender doesn't accept your offer it could help you at a later date if your taken to court.
If you are not happy with the way your mortgage lender is dealing with your case you could make a complaint to the Financial Ombudsman Service click here for more information or phone 0800 080 1800
If you cannot clear your mortgage arrears
If you cannot clear your mortgage arrears, then a court will no doubt give the mortgage lender permission to evict you from your home. If they do not recover the full amount owed from the sale they may chase you for the shortfall
It would be better for you if you can sell the property yourself, rather than get the lender to evict you and let the mortgage lender sell it. Because they are likely to sell it at auction to get a quicker sale and sell it undervalue.
Selling the property yourself may allow you to clear the mortgage arrears and debt if the mortgage lender in full and may even leave you with some extra left over.
Be cautious about selling your property through a sale and rent back scheme. Not all these companies are trustworthy and you may not be guaranteed to stay in your home for a long period and if you miss a rental payment they will evict you.
Do not be tempted to hand in your keys to your mortgage lender until you are evicted as you will be liable for mortgage payments until the property is sold
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