Mortgage arrears occur when I borrower falls behind on their mortgage repayments. This is a fairly common occurrence in the UK, especially during times of rising interest rates and decreasing home affordability.
Falling behind in your mortgage payments of only one, or several, month is not a major issue as long as you make arrangements to pay back the outstanding arrears as quickly as possible.
However, if your mortgage arrears accumulate for several months and you have no way of repaying them, your lender will become anxious and may begin the repossession process.
This is a daunting prospect for home owners and if you find yourself in this situation you may believe there is no help available. This is not true, however, so it is important to keep in mind that if your mortgage payments have fallen into arrears there are several places you can turn to for help.
The Financial Services Authority regulates most mortgages, including residential mortgages, and under their rules a lender must treat you fairly and send you regular statements regarding your arrears position.
There are also rules in place that the lender must follow if they wish to repossess your home.
You may also be entitled to financial assistance if you have mortgage protection insurance. This will usually cover mortgage payments during periods of unemployment due to sickness.
There are various types of mortgage protection insurance, each with different terms and conditions, so careful research must be conducted before taking out a policy. If you have mortgage protection insurance you should contact your insurer to find out if they can help with your mortgage arrears.
It is also worth checking to see if you are entitled to State benefits such as the Working Tax Credit, Child Tax Credit or Council Tax Benefit. Extra funds entering the household through such means can help make a difference.
There are also several organisations that are designed to offer free independent advice regarding mortgage arrears. They can advise you on your options and help calculate what you can afford to pay. They include the Citizens Advice Bureau, National Debtline, Consumer Credit Counselling Service, and the Community Legal Service Direct.
If all else fails you may consider remortgaging your property. If you have equity in your home you may be able to release some of the funds with a remortgage and pay off the existing mortgage and any outstanding arrears.
This will mean that you will still have a mortgage, however, you should be able to retain ownership of your home and avoid eviction.
