What do you do if you start missing the monthly repayments on your mortgage?
By Mr Bankruptcy
16th August 2024
The UK news has been full turmoil in recent weeks, but another story also alarms me – and it could badly affect many people – the rise in home repossessions that we’re seeing. But what can you do if you fall behind in your mortgage repayments.
A flood of repossessions
According to the Ministry of Justice, the number of repossession claims by mortgage lenders in England and Wales rose by 34 % between April and June, compared to the same period in the last financial year. This represents a total of 5,343 households losing their homes.
In addition, the number of landlords repossessing their properties from tenants also rose in the same period, though not by such a large margin, going up by 9% to nearly 24,500.
The increasing difficulty in finding legal aid may also be contributing to the rising number of repossessions, as families lose their one chance in court to keep their homes.
A perfect financial storm
A mortgage is the largest debt that most people will ever incur, so it’s important to be certain before signing on the dotted line that monthly repayments are affordable.
However, the recent extended period of high interest rates post lockdown has been putting a greater squeeze on mortgage borrowers than many budgeted for. And for many, rising living costs, loss of a job, or an unexpected bill then became the straw that broke the camel’s back.
Being late for one payment is recorded on your credit file but you can still recover if you start paying on time again; but when you miss several in a row, you are in danger of defaulting and your lender can initiate legal action to take possession of your property.
So, missing one or more monthly mortgage repayments, or not being able to pay the full amount each time are warning signs that you need to take action before you enter into a debt spiral you can’t escape.
What can you do if you fall behind in your mortgage payments?
As well as potentially making your family homeless, defaulting on a mortgage can seriously harm your ability to borrow in the future. It’s better to tackle the problem before the situation becomes too bad, rather than ignoring those letters from your lender and hoping that something turns up.
The first step is usually to contact your mortgage lender. They may agree to extend the time left on your mortgage, switch you to an interest-only mortgage with lower monthly repayments, or let you make extra mortgage payments to catch up.
Also check whether you paid for a (much-maligned) mortgage payment protection insurance (MPPI) policy or have a payment break clause in your mortgage agreement which can ease your situation.
Make sure you ask your lender if there’s a charge (i.e. redemption fee) for ending a fixed term mortgage before the agreed date, or an administration charge for changing the terms of your mortgage. If the charges seem high, you can seek advice. Mortgage lenders must also treat you fairly and have a good reason for refusing to be flexible otherwise you can go to the Financial Ombudsman Service.
You can also seek advice from a professional mortgage advisor about changing your lender for a more competitive one, especially now that borrowing rates are starting to come down and lenders should start offering more competitive deals.
Easing your financial situation
A debt advisor or a support organisation such as Citizens Advice can also explore your options for making monthly repayments more manageable:
- Looking at ways of reducing outgoings, such as ending expensive monthly subscriptions or budgeting better for shopping.
- Exploring how you can increase your income.
- Consolidating and restructuring other debts such as personal loans, credit cards, and other bills.
- You may be eligible for some state benefits.
Mortgage arrears are a ‘priority debt’, which means you must pay them before other debts, such as credit cards. Try to make regular repayments, even if smaller than the owed amount, before you get a letter threatening court action. Showing that you are making an effort to repay your debt can improve your case.
Even when it seems there’s no way forward, support can be closer to hand than you think. Friends, family or specialist advisors can help you take the first steps to getting out of unmanageable debt.
James Rosa Associates
James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive and non-judgemental approach, we offer a full range of advice and professional services.
We offer our services to both individuals and business owners/directors who are facing unmanageable debt and are looking for a solution, and to anyone involved in a civil or commercial dispute.
Our range of services include general debt advise but also more specific solutions:
We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.
Find out if you qualify for a free consultation
If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, then contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk and find out whether you qualify for our free consultation service.
Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.