A mortgage is probably the most important and largest debt most of us will ever have. Falling into arrears can feel overwhelming, but there are solutions. Often it is possible to avoid or maybe delay repossession, but firstly you should ensure that your finances are in order. Compile a detailed list of expenditure and income; this will assist you to negotiate with your mortgage lender or a court, should matters reach that stage. A comprehensive and accurate illustration of your financial affairs will demonstrate not only your competence, but also your ability to repay your debt and get your monetary affairs back on track.
The next step is to speak to your lender. They may have facilities in place for you to take a break from paying, this is sometimes called a ‘mortgage holiday’. However, eligibility for this scheme will depend to a large extent on your circumstances. If your lender is not convinced of your ability to maintain repayments in the future, they may offer you an alternative.
Mortgage lenders can allow borrowers who are in difficulty a discount on their monthly repayments. This can cut as much as 70% from your current instalments, but will depend on the policy of the individual lender. Or you may be able to switch to a different product, such as an ‘interest only’ mortgage, which will significantly reduce your monthly payments. Bear in mind though, this type of mortgage will also have the knock-on effect of increasing the term of your loan, and therefore the cost.
Your second option is to rent out your property and generate an income which you will use to maintain the mortgage payments. Clearly, this is only beneficial if there is alternative low rent accommodation for you to move in to. Also, your lender must agree to you doing so and it is possible they will refuse. The risk involved in taking on tenants, is often cited as the reason for their reluctance. Moreover, your mortgage lender may even try and persuade you to take on a buy-to-let mortgage, at further cost. A compromise could be to accept a lodger, you will still need to obtain permission from your lender, but this is a far less complicated process than becoming a buy-to-let landlord.
You may also consider selling the property quickly to become free of the debt attached to it. In this instance, going through the conventional channels can be extremely time consuming and may generate more costs. You will need to instruct a solicitor to deal with the legal aspect of the sale, as well as an estate agent to market your property.
Alternatively there are companies that buy repossessed houses, providing a swift and efficient way of raising the cash needed to clear arrears and debts. SureOffer will buy your property regardless of the condition and whereabouts in the UK. They will help you with legal fees and not charge you for the service they provide. Because they are a cash buyer, there is no chain and no lengthy sale.
Whatever option you chose, it is vital to remember that if the property remains unsold or if the full amount is not covered by the sale; you are liable for the repayment of your mortgage. The sooner you tackle the problem and the more proactive you are, the more chance you have of remaining in your property.