How To Deal With Mortgage Arrears In The United Kingdom (England and Wales)


foreclosureEvery consumer should understand that there is a difference between a secured and an unsecured debt. Secured debts are debts that are attached to an item of value, such as your automobile or your home. Failure to pay these debts can cause the debt holder to repossess the item, forfeiting ownership rights of the person who has been making payments on the loan.

Making your monthly mortgage payments should always be a priority. Failure to pay can cause the lenders to take possession of the home and sell it at auction to cover the amount remaining on your loan.

This devastating event can be avoided, however, if you take the proper actions necessary to prevent forfeiture, even if you are already in arrears.

When Your Mortgage Is Behind In Payments

The Mortgage Pre-Action Protocol was introduced in 2008 as a way for home owners and lenders to find a way to work together fairly to prevent properties from being seized for non-payment. The protocol requires both parties to try their best to make arrangements with each other to avoid court actions for repossession of the property.

If the lender still finds it necessary to file with the courts for possession of the property, they are required to complete an intake form that shows that they followed all protocol steps and the results. If protocol was not followed, they must submit to the court a reason why it was not followed and the court must approve of the reason prior to accepting the case for possession. The Mortgage Pre-Action Protocol applies to both first and second mortgages.

When There Is A Problem – It Is Never Too Late To Contact Your Lender

Things happen, that is just a fact of life. There are many reasons that you could have fallen behind on your mortgage, and to be quite truthful, they all should be seen as valid. Lenders know that there are many events taking place in the world today that are causing financial difficulties, and they are more willing than ever to work with you instead of taking possession of the home.

As soon as you realize that there is going to be a problem meeting your monthly obligations, contact your lender. Make an appointment to see them face-to-face if possible; it is much harder to deny someone help when you are looking them in the eye. If you cannot get any help at the local level from your lender, contact their main headquarters and request help from them.

When you meet with your lender, there are many solutions that you may be able to come to an agreement upon to bring your mortgage current. These may include:

• Reducing your monthly obligation for a specific period of time.

• Allow interest only payments for the current months while you are catching up on past-due payments.

• Split the past-due payments up into small payments that you pay in addition to your regular monthly payment.

• Provide a moratorium on your payments for a few months while you catch up past-due payments.

• Extend the time period of your mortgage in an effort to reduce your monthly payments while bringing you current on your loan.

• If you are unable to pay, the lender may allow you to remain in the home for a short period while the home is posted for sale and you find a new place to live.

• The lender may also recommend you for certain government schemes that you may qualify for to bring your loan current or reduce your payments.

There is no set way in which the lender will help you bring your mortgage current. All actions will be based on your current situation, financial obligations, and ability to pay now and in the future.

Reviewing All Your Debts And Finding Help

If you have found yourself with many debts, both secured and unsecured, and are having a hard time making payments, you should seek the assistance of a financial adviser. There are several free and reduced payment financial advice services, such as Shelter or the Citizens Advice Bureau.

These services will be able to provide you helpful financial information on such things as:

• Advice on budgeting and debt priorities.
• How to contact and work with your lender about your past-due mortgage.
• How to decrease spending and increase your personal income.
• Help you find out if you are eligible for any government schemes such as Mortgage Rescue or Support for Mortgage Interest.
• Help you make arrangements or provide information on how to reduce your payments each month on your unsecured debts so that you can afford to pay your mortgage.

If you are a homeowner that is collecting certain government benefits, you may qualify for the Support for Mortgage Interest Scheme. For mortgages values up to 200,000 Euros, benefit recipients can receive help on their interest payments after a 13 week waiting period. For those receiving pension payments you will qualify immediately for help, but only on mortgages values up to 100,000 Euros. There are currently no programs available that pay toward the principal payments on mortgages.

Homeowners should continue to pay what they can towards their mortgage each month, even if it is not the complete payment. Lenders are more likely to work with borrowers that have shown a commitment to repayment than those that are doing nothing about their problem.

Repossession should be avoided at all costs. If you believe that you will not be able to make up the past due amount on your loan, or make payments in the future, contact your lender about placing your home up for sale. There are programs available that will help you sell your home with the help of your lender. These programs also often have stipulations attached to them that will help with the costs of your move to a new home.


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