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Mortgage Arrears

I am in arrears with my mortgage payments - what should I do? 

If you have mortgage arrears it is important to resolve the problem now.

Mortgage ArrearsThe first step is to consider how you are going to clear the mortgage arrears in addition to maintaining your normal monthly repayments to the mortgage company.

Draw up an income and expenditure form that covers all of your monthly outgoings. (Although it is important to put down realistic figures most lenders will expect you to repay the arrears within three years at the latest.)

I am in arrears with my mortgage but can afford a little extra payment each month.

If you can afford to increase your payments to repay the mortgage arrears, contact your lender.

When contacting your lender you may be asked to send them a copy of your income and expenditure form. It may also help if you explain why you have missed payments to illustrate that this was a one-off situation.

If an agreement is established quickly and you then keep to it, the lender is unlikely to pursue further action. If there is any equity in the property the lender may be willing to 'capitalise' the arrears after six or 12 months.

Capitalisation means that the mortgage arrears are added to the outstanding balance of the mortgage and a new monthly repayment is calculated. You then pay the new monthly payment for the remaining term.

I can't afford to increase my mortgage payments to cover the mortgage arrears.

If you cannot afford to increase your payments to your mortgage you will need to increase your income.

You must attempt to cut back on the amount you spend each month on other items. If you cannot afford the repayments or cannot afford to increase your repayments to cover the mortgage arrears, you may wish to consider one of the following:

  • Take in a tenant or lodger
  • Check to see if you are entitled to any benefits that you are not already receiving.
  • If your lender has started possession action against you, you will not necessarily lose your home.

The law allows a mortgage lender to begin possession proceedings when the arrears amount to three months payments.

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Important note: The information on this and all pages on this website contains a summary of basic information on debt and debt consolidation issues. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances. You will need a qualified professional advisor to take into account your particular circumstances and to tell you how the law applies to you.

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