If you are finding it increasingly difficult to meet your mortgage demands, don’t bury your head in the sand… It won’t go away. Here are a few tips to help you.
There are, according to the FSA (Financial Services Authority) one in five mortgage holders who are increasingly worried about meeting their mortgage repayments in the next twelve months. A quarter of these stated that they had no contingency plans in place in dealing with this.
The numbers of repossessions grew to 50,000 last year, more are expected this year as the economic fallout continues. The most vulnerable groups at the moment are first time buyers, those with 100% mortgages, and all of those due to come off fixed rate mortgages.
Problems are far easier to resolve, if addressed early. Mortgage meltdown doesn’t have to end in repossession. If tackled at an early stage, the lenders or indeed the court often come to an arrangement where the borrower is able to pay off the arrears.
Financial problems may be just for the interim period, if so, consider asking your mortgage lender to reduce your monthly payments for the time needed. If your financial problems look like becoming long term, re-mortgaging over a longer period or indeed even selling your property for a smaller, cheaper one may be an option.
Knowing your financial situation is vital in moving towards a resolution. A debt plan should be drawn up. You have to be able to work out what payment you can reasonably repay to your lender to cover the repayment and any arrears that have be incurred.
Once you have the debt plan, write to your mortgage lender to negotiate an affordable repayment plan.
All lenders have different policies with regard to mortgage arrears; some are more understanding than others. You must be proactive and compliant, how you deal with this situation will certainly influence any judge should this come to court.
If you have any complaints about the way your lender has treated you, they should be handled by the lenders own complaints procedure and then on to the Financial Ombudsman Service.
Court action should always be the last resort, unfortunately if an agreement can’t be reached between you and your mortgage lender, they will be allowed to serve you with a repossession order.
Your property may be sold off at auction quickly. If the property sale doesn’t cover the mortgage, you will be liable for the deficit.
It is often preferable to sell your property personally; you may get a better price than the lender selling in haste.
Don’t panic, hand the keys over and walk away, unless the property is sold or you are being legally evicted. Unless either of these happens, you are still responsible for mortgage payments and building insurance.
A word of caution, there are an increasingly large number of property companies, who are targeting financially pressured home owners, buying their homes for ridiculously low prices and then renting them back to them. You could end up paying a high rent and worse case scenario, be evicted.
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