What are the consequences of not paying your mortgage?
If you have mortgage arrears it is absolutely vital that you do something about them and do not simply ignore the situation. Your mortgage company will want you to bring your account up to date or they will almost certainly take further action. Failure to pay what you owe on your mortgage could see you being evicted from your home and the property repossessed by your mortgage company. Repossession is not a quick process to enact, so rest assured you do have options for resolving the problem before it reaches this stage.
*Please note we help people with mortgage arrears, we do not provide mortgages*
What should I do if I cannot pay my mortgage?
The best thing you can do in this situation is to contact your mortgage provider directly, and see what options are available to you. If the arrears have been caused by a temporary lack of funds, you may be allowed to pay back the arrears in small instalments on top of your usual monthly payment. Once you have brought your account up to date, your payment will go back down to the regular amount.
EXAMPLE: If your monthly mortgage payment is £450, and you have missed two payments, you will have arrears of £900. Your mortgage lender may allow you to repay this £900 through nine instalments of £100 on top of your usual payment. This means you would make nine monthly payments of £550 – this is made up of your usual payment of £450, plus £100 towards clearing your arrears. After nine months once the arrears have been fully cleared, your payment will revert to the usual £450.
Of course this option is only viable if you can actually afford to make these increased payments and this strategy is typically only an option if your financial difficulties were temporary, perhaps due to a change of job for example.
Alternatively, your lender may allow you to add the arrears amount onto your outstanding balance and pay it off over the length of the mortgage. As long as your arrears are relatively small, this option will not significantly increase your monthly payment going forwards. The downside of this option, however, is that interest will be charged on the arrears, meaning you will pay back significantly more overall this way rather than paying it off over a shorter time period.
What happens if your financial problems are ongoing?
If you envisage yourself continuing to struggle to pay your mortgage going forward, you will need to look at a longer-term solution to the problem. This could include increasing the length of your mortgage, or temporarily switching to an interest only loan. While this may give you a better chance of being able to stay in your home, both of these options will see you paying back much more money over the life of the mortgage.
If you ignore the arrears you have built up, your mortgage company may have little choice but to begin court proceedings to obtain a ‘possession order’. This is a very serious step and could eventually lead to you losing your home. However, all lenders see repossession as an absolute last resort and would much rather resolve the situation before it gets to this stage by coming to a mutually acceptable solution that satisfies both parties.
Seeking professional advice is of paramount importance if you are struggling to pay your mortgage as time really is of the essence. Call our experienced advisers today for help and advice to get you back on track and back on a solid financial footing.
How We Can Help
When it comes to personal debt, there are a number of formal debt solutions which can be used to help you manage the money you owe; from Individual Voluntary Arrangements (IVAs), through to Bankruptcy in the most serious cases. We also provide insolvency solutions for businesses debts, including rescue and closure options. The experts at Northern Ireland Debt Solutions can help you understand all of your options, before working alongside you to put a plan in place to help you move forward.
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Ready to take the first step to a debt-free future? Contact Northern Ireland Debt Solutions today to understand your next steps.