Act
quickly
If you fall behind on your mortgage payments,
you need to take action straight away. In
some cases, the problem can be solved if
you act quickly. Don't wait until the debt
becomes unmanageable. Many lenders charge
penalty fees if you miss payments. The sooner
you deal with the situation the more options
you have, and the less chance that you will
lose your home.
Negotiate
with your lender
If you have difficulty paying your mortgage
(or think that you will have, for example
because you have lost your job) it's important
that to talk to your lender as soon as possible.
Don't be put off because you think your situation
is hopeless. There is often a solution. If
you haven't yet decided what to do about
the problem, explain to your lender that
you are going to get specialist advice about
your options. Direct access to our team of
trained Debt Advice Counsellors is available
now.
Most lenders will expect
you to come up with your own plans for paying
off your mortgage, rather than making suggestions
as to what you should do. You need to show
that you will be able to pay of any arrears
you have and keep up with future payments
until your mortgage is completely paid off.
If you haven't worked out your options yet,
it's still important to speak to your lender
as soon as possible, to let them know that
you are taking action to put things right.
You can either write
to your lender or make an appointment to
discuss your situation in person. You will
need to:
- produce a detailed
statement of your income, spending and
debts
- explain any plans
you have to increase your income or reduce
your spending.
- explain what changes
you would like to make to the mortgage
and how the new arrangements will affect
the future payments
Your lender will
consider your proposal and decide whether
to accept it. You may have to negotiate
further. If you switch to a different
mortgage, particularly if it is with
a different lender, you may have to
pay a redemption penalty. It may be
possible to add any fees or redemption
penalties to the your mortgage and
pay them off over the rest of your
mortgage term.
Get
advice
Negotiating with your lender can be
complicated, especially if you are
not sure what options are available.
There are a lot of options for lenders
but they can sometimes be reluctant
to use them. You may want to get independent
advice before you decide what to do.
A specialist adviser can help you to
look at all the options and put together
a realistic and affordable proposal. Direct
access to our team of trained Debt
Advice Counsellors is available now.
Pay
as much as you can
Paying your mortgage has to be your
top priority, even if you are under
pressure to pay other debts as well.
Losing your home through repossession
would only make your debt problems
worse, so it's essential to keep paying
as much as you can afford. This will
help to stop your mortgage arrears
from rising too quickly. It will also
show your lender that you are trying
to tackle the problem.
Mortgage
payment protection insurance
Do you have insurance that would keep
up your repayments for a time if you
are unable to work because of illness,
accident or being made redundant? Some
people take this insurance out when
they first take out their mortgage
and then forget that it exists, as
it may be included in your monthly
mortgage payments.
If you have this
type of insurance (which is different
from a mortgage indemnity guarantee
or life insurance), check the policy
carefully. Many policies will not pay
out until a few months after you are
unable to work, and then for no longer
than a year or two. You may need to
make other arrangements to cover anything
that is not covered by your insurance.
Work
out your options
The best way for you to sort out your
payment problem will depend on your
individual circumstances. If you want
to stay in your home, you will need
to find a way of stopping your arrears
from rising while keeping up with your
future payments. You also need to pay
off any arrears that have built up
so far. To do this, you need to consider:
- cutting back
on non-essential spending
- increasing
your income (through wages, benefits
or renting out a room)
- reducing your
mortgage and/or insurance costs
- If none of
these options are possible, or you
want to leave, you may decide to
sell your home voluntarily and move
someWere more affordable. You may
also be tempted to give your keys
to your mortgage lender, but this
will probably increase your debts.
Reducing
your mortgage payments
Although you will eventually have to
pay back the whole of your mortgage,
there are several ways that it might
be possible to change it to make your
monthly payments more affordable, including:
- taking a 'payment
holiday'
- switching to
a different mortgage
- adding your
arrears to your mortgage
- extending the
number of years on your mortgage
- reducing or
stopping your capital repayments
temporarily
- reducing or
stopping your endowment policy (or
other investment) temporarily
- surrendering
or selling your endowment policy
or other investments
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