What To Do When You Have Mortgage Repayment Problems
What To Do When You Have Mortgage Repayment Problems
In the current economic climate, many people may find themselves worried about meeting their mortgage repayments. The following guide offers helpful advice if you find yourself in a tricky situation.
All in all, there are three main steps you should take if financing your mortgage is keeping you awake at night:
Step 1 - Speak to Your Lender
If you find yourself struggling to pay your mortgage or foresee it will become a problem in the near future, the worst thing you can do is put your head in the sand and hope for the best. The wisest approach is to take the bull by the horns immediately and call up your lender to discuss your situation. They will be far more understanding and helpful if you do this sooner than later and will sympathetically work with you to find a repayment solution to match your finances. Some lenders have telephone Helplines or other Debt Counselling facilities setup to make this first step easier.
The best way forward if you can't afford your full mortgage repayment fees is to work out a realistic strategy with your lender to continue paying what you can afford. This will show them that you're responsibly committed to resolving the problem. Your lender might offer a variety of helpful solutions, including:
- Reducing your monthly repayments by extending the term longevity of your loan.
- Changing the way you make your payments, or the date you make them.
- If you have a repayment mortgage, you could consider switching to an interest-only loan. This will mean however that for the length of your mortgage term, the repayments will not cover the actual capital loan - at the end of the mortgage arrangement this will have to be paid in full.
- Adding arrears to the outstanding mortgage amount rather than seeking immediate payment.
- Reducing your payments for a short period of time until you're able to resume full payments. At that point you would have to repay any arrears that have accrued.
Bear in mind that the earlier you make contact with your lender, the more options there will be to resolve the problem. These will be short-term solutions however - in the long-term a repayment problem will have to be definitively resolved. Each lender has a set policy on out how they will treat borrowers when their mortgage is in arrears. Make sure your lender provides you with information explaining how you can expect to be treated by them if this situation occurs.
Step 2 - Good Advice
There are a number of debt advice agencies in the UK which provide free and independent money advice to the public. Their advisers can help you get to grips with your financial problems and recommend the best way forward to resolve them.
This step is particularly important if you're worried about approaching your lender direct or if you have multiple debts. These organisations can help you significantly with the right advice and will work with your lender if they are given the permission to act on your behalf. What's more, debt advisers can also steer you in the right direction by advising on and helping you apply for government schemes that help homeowners.
Step 3 - Research & Other Options
If you're having trouble paying your mortgage due to reasons such as an accident, becoming unemployed or being too sick to work, a mortgage payment protection policy would be just the ticket to give you a helping hand. This would have been taken out when you first applied for your mortgage to cover you against unforeseen events that damage your finances. If you have an eligible claim, this type of insurance will cover your mortgage repayments up to a period of 12 months or sometimes even more.
Another option is to research online the government benefits and schemes to help homeowners in difficulty - the good news is that in this ailing economy these have recently been strengthened. You might just be eligible for some of them.
Conclusion
When it comes to mortgages, payment problems can be highly stressful as in effect your own home is at risk. Instead of getting run down with worry, the wisest approach is to take informed action in getting help with tackling your finances.