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Mortgage Arrears - Advice for those with Money Problems

If you are having problems paying off your mortgage, rest assured that you are not alone. Many homeowners experience these difficulties in this day and age. It may have to do with changes in your personal circumstances. If you find yourself having financial difficulties, for any reason, you should get financial advice immediately to avoid losing your home. Repossession can often be stopped or delayed, even if the bailiff has already been called in. If this is the case with your home, call Betterway immediately for advice.

Act quickly

If you happen to fall behind in your mortgage payments, it is of vital importance to take immediate action. The problem can usually be solved right away, but you must act quickly. Do not wait until the debt becomes completely unmanageable. The sooner you deal with the situation, the more options you will have.

Talk to your lender

If you are experiencing difficulties paying for your mortgage, you should establish contact with your lender right away. Do not put it off. There is often a solution. If you do not know what to do, explain to your lender that you are seeking specialist advice.

Getting Advice

It can be quite tough to negotiate with a lender – especially if you are not aware of what all your options are. While there may be a lot of options for lenders, we are sometimes reluctant to use certain ones. This is why it is of vital importance to seek advice before making a decision. Betterway considers all of these options for you before putting together a realistic proposal to suit your needs.

Pay as much as you can

You do not want to use your home – thus, paying off your mortgage should always be your top priority. This is why it is essential to keep paying as much as you can afford – this is much better than paying nothing at all. This helps your mortgage arrears in the long run, as it prevents them from rising too quickly. It also shows your lender that you are at least making an effort to get out of debt.

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.

Don't Borrow more money

If you have lots of other debts as well as your mortgage, you may be tempted to take on a larger mortgage with another lender. This may enable you to pay off clear your debts, but it can also be risky. Even if the interest rate is lower, it may be difficult to afford a bigger mortgage. You may also have to pay arrangement fees. 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 somewhere 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

The best solution usually depends on the type of mortgage you have and your age and personal circumstances, including how much you owe, how much you can afford to pay each month and how many years are left on your mortgage.

Flexible mortgages

Flexible mortgages give you more freedom to repay at the speed you choose. If you have this type of mortgage, you may be able to decrease your monthly or take a 'payment holiday' and pay nothing for a few months. Some lenders will only allow you to do this if you have made extra payments beforehand, but others may allow you to catch up on any missed payments later. If you need to do this, you should talk to your lender as soon as possible.

Reducing insurance costs

It may be possible to reduce your buildings insurance, contents insurance, life insurance and/or payment protection insurance. You can't stop your buildings insurance policy altogether (it's normally a condition of your mortgage) but you may be able to find a cheaper policy. Contents insurance, life insurance and mortgage protection insurance can sometimes be reduced. It's also possible to stop them, but this could be risky. If you do this, you need to consider how you would pay off the rest of your mortgage or cover the cost of replacing the contents of your home without them.

Honour the agreement

It's very important to stick to any agreement you make with your mortgage lender. If you don't it will probably be more difficult to negotiate with your lender in future. If you have already negotiated an agreement, but are having problems sticking to it, get advice immediately. An adviser may be able to help you to persuade your lender to change what was agreed.