I am in arrears with my mortgage
payments - what should I do?
I am in arrears with my
mortgage payments - what should I do?
If you have mortgage arrears
it is important to resolve the problem now.
The first step is to consider
how you are going to clear the arrears in
addition to maintaining your normal monthly
repayments to the mortgage company. Draw up
an income
and expenditure form that covers all of
your monthly outgoings. (Although it is important
to put down realistic figures most lenders
will expect you to repay the arrears within
three years at the latest.)
I am
in arrears with my mortgage but can afford
a little extra payment each month.
If you can afford to increase
your payments to repay the arrears, contact
your lender.
When contacting your lender
you may be asked to send them a copy of your
income
and expenditure form. It may also help
if you explain why you have missed payments
to illustrate that this was a one-off situation.
If an agreement is established
quickly and you then keep to it, the lender
is unlikely to pursue further action. If there
is any equity in the property the lender may
be willing to 'capitalise' the arrears after
six or 12 months. Capitalisation means that
the arrears are added to the outstanding balance
of the mortgage and a new monthly repayment
is calculated. You then pay the new monthly
payment for the remaining term.
I can't
afford to increase my mortgage payments to
cover the arrears.
If you cannot afford to increase
your payments to your mortgage you will need
to increase your income.
If you cannot afford the repayments
or cannot afford to increase your repayments
to cover the arrears once you have attempted
to cut back on the amount you spend each month
on other items, you may wish to consider one
of the following:
-
Take in a tenant or lodger
- Check to see if you are entitled to any
benefits
that you are not already receiving.
- If your lender has started possession
action against you, you will not necessarily
lose your home. Click
here for more information.
The law allows a mortgage lender
to begin possession proceedings when the arrears
amount to three months payments.
For more infomation on mortgage
arrears contact you local CAB - www.nacab.org.uk
OR call the
Payplan 0800 917 7823.
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