What to do if you are struggling to make a mortgage payment

What to do if you are struggling to make a mortgage payment

With the owners of approximately one million properties likely to default on their mortgages over the next year and a 49% increase in calls about mortgage arrears being made to the Citizens’ Advice Bureau, it would appear that the squeeze on people’s incomes is continuing to tighten. However, there is plenty of help at hand. Here is a look at the steps you should take in order to mitigate the impact on yourself, your family and your future credit rating of defaulting on your mortgage.

Talk to Your Lender

It may sound obvious but it is essential that you speak to your lender as soon as you realise that there may be an issue. Hoping that they will not notice is pointless and the worst-case scenario is that your lender may begin repossession proceedings. At the very least you will damage your credit rating.

Many lenders will offer help with mortgage payments as much as they can. For example, they might offer to allow you to defer payment, extend the mortgage term or to cut the size of your payments, making them more manageable. It is always best to talk it through with your lender.

Get Some Independent Advice

There is lots of free and independent advice available to help those who need help with mortgage payments. Find your local branches of StepChange, the National Debtline or the Citizens’ Advice Bureau. They will assist you in preparing a budget and discuss with you what to say to your lender.

Look for a Solution

When you sit down with your lender, discuss your options in detail and make sure you fully understand any repercussions of deferring payment or taking a break from your mortgage. Usually these options will mean your mortgage will be more expensive in the longer term. The Homeowners’ Mortgage Support Scheme set up by the Government is also worth looking at if your income has suddenly dropped.

Be Realistic with Your Budget

This is the stage to be really honest with yourself. Sit down and work out your income and outgoings. When it is down on paper, it is easier to see where your money is being spent and where perhaps it could be saved.

Take Responsibility for Your Debts

Once you have looked at your budget, you will need to prioritise payments. If your mortgage is your only debt this is relatively easy. If, however, you also have other debts such as credit and store cards it can quickly become overwhelming. Your mortgage debt should come before all the others as your top priority is to keep your home.

Pay as Much as You Can

The key to getting yourself out of this situation is to try to keep up with your minimum payments as this will give your lender confidence that you are trying to you’re your commitments. Even if the amount is slightly less than agreed, it is better to keep up some kind of regular payment.

Although you may be experiencing some difficult times, it is essential to keep calm and take action quickly. As with all forms of debt, it is far better to confront mortgage difficulties head on rather than ignore them.

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