Mortgage Arrears - What Can You do?

With the economy still in a precarious position despite what the government tell us, its somewhat prudent to discuss what can happen if your worst nightmare actually comes to fruition and you get yourself into arrears on your mortgage.  Although there has been slight growth in the economy over the last two quarters it is still too small to make a significant difference and the numbers of people in financial trouble with difficulty paying their mortgage have increased substantially over the last year. So what can actually happen.

The first thing to realize is that although it can seem like the end of the world, it needn't be. Even if your financial situation is so dire that you can't see an end to it, there are things you can do to cope. Mortgage arrears are what is classed as a 'priority debt', a debt seen by county courts and financial institution that take precedence in any repayment plan so its hugely important for you to start doing something as soon as possible and don't hide your head in the sand. Contact your lender and see what can be done or at least get some advice from an impartial debt counseling service. Its also important that you try to keep making some sort of token payment if you can in order to show good faith.

Most people consider keeping a roof above their head the most important aspect of modern life but the recent economic crisis, rising unemployment and increases in other bills and overall debt have made it increasingly difficult for consumers to keep on top of regular repayments. One of the first things to do when asking a lender to accept a token payment scheme is to fill in an income and expenditure form. This form will give the lender a detailed overview of your financial situation and give them an idea as to what you can afford to pay back on a regular basis, legitimizing your offer of a token repayment.  Also let them know about any change in circumstances, unemployment, marriage breakdown, decrease in wages because it can all have an effect on your capacity to make repayments. Also, the lender will, in most cases want you to make some sort of additional payment on the arrears in addition to the agreed monthly sum and some will want the arrears cleared over the next 1 to 2 years.  If you can't manage that, don't worry, just start paying what you offered.  It will at least give you something to bargain with when you go back to the table. 

There are ways you can get assistance with your repayments such as a mortgage rescue scheme offered by the lender, any insurance you might have, even the DWP if you are unemployed and claiming jobseekers allowance or income support. Even taking in a lodger or tenant might assist in the short term by getting some extra cash in, however, it can be a difficult decision to take someone into your home, especially if you are suffering from a debt problem or are in financial difficulty.  The final thing you can do if you are really in an unescapable position is to hand the keys to the lender and let them sell it. The bd thing about this decision is that not only have you lost your home but you will also have to make the repayments until its sold, thi should be avoided at all costs,.

In reality house repossession is on the increase and until the economy picks up in a really beneficial form there will still be large numbers of people struggling to make mortgage repayments.  It is however, vitally important to address the issue as quickly as possible.