Mortgage arrears usually occur as a result of an unexpected life event, such as failing health. The threat of repossession rarely assists that chronic heart problem, but talking to the lender and seeking mortgage arrears advice can make a huge difference as there may be something that has been over-looked.
Talk to the Lender Regarding Mortgage Arrears
The attitude of the lender towards mortgage arrears varies considerably between lenders, with adverse credit lenders being the most unhelpful. A mortgage default with an adverse lender is far more likely to result in repossession, but the courts aren’t keen on allowing this due to the current housing crisis. Many unlawful mortgage agreements exist and compensation can be awarded if they are deemed unfair.
Capitalising Mortgage Arrears
If things are likely to change some lenders will even be prepared to ‘capitalise’ any arrears by adding the mortgage arrears to the principal loan. This means that the mortgage arrears can be paid off gradually over an extended time period.
Ask the Lender if it is Possible to Switch to an Interest Only Mortgage
Making the switch to an interest only mortgage can leave more money at month end to tackle any outstanding mortgage arrears. It is advisable to seek mortgage arrears help from a qualified debt counsellor before proceeding.
Unlawful Mortgage Agreements
The Consumer Credit Act 2006 has extended powers to the Financial Ombudsman to make decisions regarding whether an unlawful mortgage agreement exists. This can result in the loan being re-written or even written off if deemed to be unfair and unjust. For example, a customer was sold an adverse credit mortgage when good credit existed.
Use a Debt Solution to Deal with Unsecured Loans and Credit card Debts
If it is proving impossible to pay the mortgage, use a debt solution to tackle credit card debt and personal loans. For example, putting all unsecured debts into a Debt Management Plan may free up a substantial sums of money to clear any mortgage arrears. This may raise enough to pay off arrears and stop repossession.
Help Paying the Mortgage for those on Benefits
Those on state benefits may be able to get assistance with the payment of interest on a mortgage of up to £200,000. If a mortgage was taken out after 2nd October 1995, no support is offered for the first 39 weeks. Those who took out a mortgage before that date can claim after 8 weeks. Seek mortgage arrears advice or talk to the local Job Centre for further guidance.
Mortgage arrears is a huge concern because of the ramifications, but there may be a debt solution that can resolve it. No matter how bleak things may seem, be sure to get mortgage arrears help as soon as aware that a problem exists. The sooner the issue is identified the better the chance of surviving it.