Being in debt of any kind can be stressful and this is especially true of mortgage arrears. In the worst case scenarios, this form of adverse credit can pose a risk to the roof over your head; but it’s important to keep in mind that help and support are always available.
What happens when you fall into mortgage arrears?
If you fall behind on your monthly mortgage payments and rack up a deficit equivalent to the amount of two or more of them, you’re classed as being in arrears.
Within 15 days of this happening, your mortgage provider must contact you to provide the following information…
- How much arrears you’re in
- A breakdown of every payment you’ve missed or only made in part
- How much is left to pay on your mortgage
- Inform you of any charges you’ve incurred as a result of falling into arrears
If the situation is not rectified, mortgage lenders, in the most extreme cases, can begin the repossession process but only after giving you an appropriate amount of notice, and after all other reasonable attempts to resolve the issue have failed.
What you should do first
Your first step if you’re in mortgage arrears should always be to speak to your mortgage lender to provide them with a complete picture of your financial situation and the reason you’ve fallen behind with your payments. They will be keen to discuss options with you.
Possible solutions they could offer include…
- Remortgaging: Either to consolidate your debt or move onto a more affordable mortgage agreement to help you get back on track with your payments.
- A mortgage payment holiday: Some of the more flexible mortgage lenders might offer this option under the right circumstances. Just keep in mind that your mortgage debt will continue to accumulate interest while your payments have paused.
- Switch to interest-only: This would lower your monthly payments by allowing you to only pay your mortgage interest each month and either settle the debt at the end of the term, or switch back to a repayment mortgage when this is viable.
- A bespoke repayment plan: At their discretion, some lenders may allow you to make temporary changes to your mortgage without refinancing. These may include extending the term length to bring down your monthly repayments.
As well as speaking to your lender, there are some general pieces of advice you should take on board while trying to get back on track. Firstly, explore where you could potentially cut costs – not just nipping non-essential spends in the bud, but checking whether you could save money by switching your utility bill provider or changing to cheaper insurance plans.
Secondly, most experts would advise you to avoid taking on any additional unsecured debts as a solution to your arrears. Rates on unsecured lending are typically high and taking on more, coupled with your arrears, could have a serious impact on your credit reports.
Support that’s available
If you’re likely to struggle to get on top of your mortgage arrears, even if your lender offers you one of the above arrangements, there are other sources of help available, including…
- Mortgage brokers: The mortgage brokers we work with can go through all of the above options with you and help you choose the right one. If you’re unable to remortgage with your current lender because of your arrears, they could help you find a specialist mortgage provider who would consider your application.
- Debt counselling services: Free debt advice is available from charities and independent agencies including Citizens Advice and StepChange.
- Government benefits: If the reason you’re struggling is because you have low income or another personal circumstance which would mean you’d fit the criteria for government benefits, it’s worth exploring what support is available. You can find out whether you qualify for any benefits on the UK Government’s website.
- Insurance cover: If you took out mortgage payment protection insurance and the reason you’re in arrears is redundancy, an accident or sickness, you may be entitled to help with your mortgage payments. This, of course, will be no help if you didn’t take out a policy, but it’s worth checking your mortgage paperwork if you’re unsure.
In conclusion
Being in mortgage arrears can become a serious issue if action isn’t taken to get on top of the problem. In the most extreme cases, it can force the homeowner to sell their property or end up having it repossessed – but there is support available to stop it coming to that.
Your mortgage lender is obligated to work on solutions with you, and if this should fail or you fear it might do, keep in mind that there are other sources of help out there.
Speaking to a mortgage broker if you’re in this situation is always a good move, as your initial consultation with them will be free with no obligation to take things further. They can go through every option with you and guide you through the next steps.
Make an enquiry and we’ll match you with a mortgage broker who can help today.