Mortgage Arrears

What to do?

If you are struggling to make you mortgage repayments and getting into mortgage arrears it is a serious problem which could ultimately lead to your home being repossessed by the lender.  This will mean you and your family being evicted from your house for mortgage arrears.  However, there are a number of possible courses of action.  The problems could be due to losing your job or another legitimate reason. The first thing to do is contact your mortgage company.  This should be done as soon as you have difficulties meeting mortgage repayments.  Then the following courses of action can be considered..….

  • Check whether you are covered by mortgage protection insurance.  If you are then you can make a claim.

  • If you are now unemployed or only working part time then you may be entitled to income support.  You may also be eligible for an income based Jobseeker’s allowance or JSA which can be used to aid with interest payments on your mortgage.  The capital payments will still have to be met by you and the JSA may not even meet all the interest part of the payment.

  • If your financial circumstances have changed you may be entitled to help from the government.  For example, even if you work you may be entitled to receive tax credits to boost your income.

  • If you have a repayment mortgage ask your mortgage lender to have it changed to an interest only mortgage.  Alternatively ask whether they will agree to accept reduced payments for a time.

  • If you are behind on payments on an endowment mortgage, enquire about switching to a repayment mortgage and cashing in on your endowment.

  • Look at switching your mortgage lender and cutting repayments by changing to a mortgage with a lower rate of interest.

  • Alternatively you could consider extending the term of your mortgage.  This will lower your repayment but it will mean that over the longer term you will pay back more.

  • Examine the possibility of renting your home.  You could then either stay with friends or family until your financial situation improves or rent somewhere cheaper.  The money received in rent will help to meet the mortgage payments.

  • And finally if you are evicted for mortgage arrears your local authority may refuse to find you a house.  Because you have been made homeless by not meeting mortgage repayments you will be deemed to have made yourself homeless.
  • There are many companies specialising in buying properties facing repossession by the mortgage lender.  They will buy a house from an owner who is struggling to make mortgage payments.  The price they would pay would be significantly lower than the market value and this is how such companies make their money.  However, they do provide a homeowner who is struggling to meet the mortgage payments another option.  Many of these companies offer a scheme where after selling the house to them you may rent it back.  This means you will avoid the hassle of moving house.

    Support

    There are organisations that can offer help when faced with eviction because of mortgage arrears.

    • The Homeowner Rescue Advice Centre is one such organisation.  It is a registered charity that was established to offer advice, support, and practical assistance to homeowners facing repossession due to difficulties in making mortgage repayments.  
    • The CAB is another organisation that can offer advice to people facing repossession.  It offers legal advice on what courses of action are open to you and will also be able to assist you in claiming any benefits to which you are entitled.   

    • Legal Aid may be available to people who need help with their legal costs.  It can help fund a solicitor to deal with your case.  The Legal Services Commission is involved in the process of providing legal aid.  It can help pay for legal help from a lawyer and help pay the cost of preparing a case for court.  Whether you are entitled to assistance with your legal cost will depend upon your monthly income.  If you receive any benefits you will automatically qualify for Legal Aid.  Owning a home outright or having over a certain amount of savings in the bank may affect your entitlement to Legal Aid.  Your solicitor will be able to advise you as to your entitlement.

    • Shelter, the housing and homeless charity, is another organisation that can offer advice.  They have a helpline dedicated to assisting homeowners faced with repossession.

    Remember that before your lender can repossess your property two condition must be satisfied:

    • the lender has a Court Order for repossession of the property; and
    • the Court must also have issued a Court Bailiff with a warrant to evict you.

    Unless these conditions are met the lender cannot repossess the property!