Mortgage Arrears: How to Deal with Repayments?

Once you’re falling behind your mortgage payments, it means you have mortgage arrears. These arrears are recorded on your credit file, which can affect your creditworthiness. Besides, unable to settle any arrears on your mortgage can put your home at risks from repossession.

Financial Help During COVID-19 Pandemic

Several measures are considered to assist individuals who are coping with the effects of COVID-19 or Coronavirus Pandemic to their finances. These include payment breaks on mortgage and payment holidays for some unsecured debts and moratorium extension for residents in Scotland.

You may also read our guide: Financial Help Available During Coronavirus Pandemic and Payments for Car Loans and Finance During Coronavirus Outbreak.

What happens if I don’t pay on time on my mortgage?

You will certainly be contacted your by your mortgage provider to check on the reason for non-payment. After such, you are given adequate time to settle your payments. If you are vigilant to contact your lender, you’ll be given the time to pay off the entire amount or negotiate an arrangement to pay the arrears through instalments. This can happen if you’re unable to pay the entire amount on your arrears.

Once you have lapses in complying with the agreed terms, they can follow the normal debt collection process.

Possible Options that Your Lender May Provide

Switching to an Interest-only Mortgage

This is a short-term remedy since you’ll just be paying the interest on your mortgage and not the capital.

Extending Mortgage Term

This can lower your monthly installments, which can make the payments affordable. However, you must weigh your options whether you can pay the mortgage further over a long period which can ve after you retire.

Requesting for Payment Holiday

You can get a break for paying your mortgage for several months, granted that you’ve provided proof that you’re on the financial crisis

Assisted Voluntary Sale Scheme

Your mortgage lender may give you sufficient time and aid once you decide to sell the property.

Government Mortgage Help

You can also get assistance fro the government in terms of your mortgage payments. This is done through Support Mortgage Interest or SMI

Clearing My Mortgage Arrears

The initial step to take is to create a realistic budget. This can help you understand how your money is spent and where it is paid for.

  • You have to list all your income, and expenses which include your debt payments.
  • Check whether you have adequate money left each month after all your essentials are covered. This amount is what you can afford towards debt payments.
  • Whether you have spare money left or not for your debts, it’s always best to check for options that can help you increase your income and save money.

How long do mortgage arrears remain on my credit file?

All missed, delayed or incomplete payments are listed on your credit file for at least six years. 

Can I sell my home with mortgage arrears?

Sometimes selling your home is a suitable means if all options are exhausted. Nevertheless, you should consider the following condition or pointers when determining whether selling it can benefit you better:

  • Negative equity – the value or proceeds cannot cover your debt.
  • You’ll end up renting a home at a higher expense
  • You’re thinking to go ahead with insolvency, such as bankruptcy. The official receiver may know about the sale when they review your insolvency application and can affect your application esp. if you sold the property at a lesser value.

I’m worried that my home might be repossessed

If you are anxious about losing your home because of your mortgage arrears, do not heist to call us. We have experts who can help deal with your situation. Give us a call on 0800 193 1024.