How To Deal With Mortgage Arrears

Every day, thousands of people have a problem with mortgage arrears. For one reason or another, they find that they just can't meet their monthly mortgage payments. This may happen because of job losses, illness, or relationship breakdown - all of which can impair a person's financial health. Whatever the reasons for your financial difficulties, your mortgage is a debt that you can't afford to ignore. Failure to repay your mortgage could lead to the loss of your home, when lenders repossess it to recover the debt you owe.

Dealing With Mortgage Arrears
So, how do you deal with mortgage arrears and prevent the loss of your family home? The first thing to do is to contact your lender. Most lenders don't want to take your home. They would rather have the money than the hassle of repossessing and auctioning your home, so they will do everything they can to help you survive payment difficulties.

Under the law, lenders must treat their customers fairly, and take any payment difficulties into account before taking action. If you contact your lender and explain that you are having trouble meeting your mortgage payments, your lender will use existing procedures to address the problem, and will also put you in touch with independent organisations that can help you. The chances are that if you are having trouble with your mortgage payments, you will also need some help with the rest of your finances.

Many people think that mortgage companies will ask for the whole amount that is owed to be paid immediately, but this isn't true. If you are already in arrears, then your mortgage lender is likely to help you set up a payment plan so that you can pay the arrears back gradually, adding a little bit to your monthly payments.

Not Yet In Arrears?
If you are not yet in arrears but know that you soon will be, then there are other options to discuss with your mortgage lender. For example, if you have a capital repayment mortgage, where you repay some of the capital as well as the interest each month, your lender may allow you to repay the mortgage on an interest only basis for a short time. This will reduce your monthly payments, while preventing you from accruing additional mortgage debt. Of course, you won't be clearing the debt either, but it is a good alternative to racking up mortgage arrears.

Another way to reduce your monthly payments is to extend the mortgage term. This means that you would have a longer period in which to repay your mortgage, and so your monthly payments would be lower. This may be a good short term strategy for dealing with mortgage arrears. However, remember that you will be paying interest over a longer period, so you could end up repaying more than your current debt.

If you have a good track record with your mortgage lender, the lender may be willing to reduce the amount you have to repay for a short period while you straighten out your finances. Some lenders even offer payment holidays, where you don't have to repay the mortgage at all for a period of several months. Payment holidays are usually subject to other conditions, but it is worth checking to see if this strategy can help you.