Credit Crunch

How to cope with mortgage arrears

The Council of Mortgage Lenders has reported that the number of people in arrears with their mortgage at the end of September this year was 168,000, which is 8% higher than the 155,600 who were in arrears at the end of June.

By December, that figure is likely to rise dramatically and is expected to exceed the previously forecast figure of 170,000.

So, what should you do if you’re experiencing difficulty in paying your mortgage?

Here are a few tips that should help you to manage your debts more effectively and keep a roof over your head.

Write a list of all your debts. You need to have a clear idea of who you owe money to and what interest you’re being charged. Then, prioritize your debts ensuring that any loans secured against your property are paid first.

1. If you’re struggling, TALK to your lender! For many, it seems easier to just ignore the letters and phone calls from lenders but unless you talk to them, they can’t help you and will assume you’re just ignoring your payments.
2. If it’s gone that far, always ensure you abide by the rules of any county court judgement and stick to any arranged payment plans. Failure to do so can result in your home being repossessed with little or no further warning.
3. Always gets free and independent advice about managing your debts because most lenders will take the advice of a debt management agency about your finances but may not if you approach them yourself. The Citizens Advice bureau and the Consumer Credit Counselling Service will negotiate with lenders on your behalf too, saving you all those distressing calls.
4. Don’t decide that simply giving your keys back to your lender will be the end of it either. In the US, the returning of keys in the post has become so commonplace it’s known as “jingle mail”! However, you may still be liable for any shortfalls if the lender doesn’t clear your debt by selling the property and they can chase home owners for this money for up to six years.