Mortgage Arrears

Falling into mortgage arrears can make people feel frightened and vulnerable. After all, every man's home is his castle, but there are ways to escape from this situation.

Call Payplan free on 0800 917 7823 or use our online Debt Calculator for a quick and easy way to get free mortgage advice from experienced professionals.

Payplan can help

It's vital not to ignore mortgage arrears however frustrating and upsetting the situation may appear. To prevent against house repossession, any issues associated with your mortgage need to be addressed as a priority.

Ideally mortgage arrears should be cleared as quickly as possible. This usually depends on the period of time over which they have accumulated and the type of mortgage involved. Remember that mortgage lenders are generally willing to negotiate how best to achieve this and so establishing, and then maintaining, contact with them is highly advisable.

Talk it through

By law, lenders are obliged to treat you fairly. Taking into account that everyone's circumstances are different, it's a good idea to explain why your payments are in arrears - it will also reassure the lender that you are both aware of and dealing with the problem.

It's helpful to be honest about your circumstances which may have changed - for example, redundancy, illness, death of a partner, relationship or family difficulties. Revisit the small print, and check the terms and conditions of your cover for any mortgage protection insurance you may have. If your property is currently worth substantially more than the total mortgage, your lender may allow you to repay the arrears over a longer period.

First steps...

Work out first what you can afford to pay the mortgage lender. The best way to do this is to keep a record of all your outgoings against your income. Payplan can help you do this.

Moving forward

Most lenders expect the arrears to be repaid within three years so you'll need to predict the extra amount that you can afford to pay on top of your regular monthly mortgage payments. The lender may also have a suggestion about how to repay the arrears - this could be by adding them to your existing loan or else negotiating a new repayment plan.

We've listed a few possible ways of tackling mortgage arrears below - one of them might be right for you.

Interest only mortgage

If you took out a repayment mortgage, you'll be paying a monthly instalment of interest and capital. For a short period, your lender may accept payment of the "interest only" element, particularly if you foresee the ability to resume normal payments again relatively quickly.

Extending the terms of the mortgage

If you have a good track record, your lender may agree to increase the mortgage beyond its original terms, ie, an increase from 25-30 years. This will reduce the monthly payment in order for you to make a contribution towards the arrears you have.

Increasing your income

Below are a few ways of potentially increasing your income to maximise funds:

Explore whether you can take in a tenant or lodger who can boost your income. The government's rent a room scheme allows you to earn £4,250 a year, or just under £82 a week, from a lodger without paying tax on it. There is more advice about this at http://www.direct.gov.uk. You may need the permission of your mortgage lender.
You may be entitled to benefits such as Working Tax Credit, Child Tax Credit, Disability Benefits, Income Support top-up or Council Tax Benefit. They can make a real difference to your income and help with your mortgage payments. Payplan can check your eligibility on your behalf free of charge using authorised software from the DWP.
Investigate whether you could lower life insurance or house and contents premiums.

Payplan offers free advice for all debt situations and can help you find the best solution whatever financial difficulties you face. If you're concerned by mortgage arrears, you are not alone. Please take action now and seek advice straight away. We are here to help.

Call Payplan free on 0800 917 7823 or use our online Debt Calculator for a quick and easy way to get free mortgage advice from experienced professionals.

Your home may be repossessed if you do not keep up repayments on a mortgage or any debts secured on it.