The most important thing to do in this circumstance is to ask for help! Don’t be an ostrich and stick you head in the sand!
Unfortunately, this problem won’t go away (unless you have a big lotto win!!). Your lender will notice if you miss a payment and will probably try and contact you immediately. If you are struggling, pick up the phone and talk to them.
It may be that the lender will let you take a payment holiday, giving you a break from paying your mortgage for a set amount of time, to help you get back on your feet. Before accepting this offer though, you should check that by doing so, your credit score will not be impacted upon negatively, as this could affect your ability to secure credit in the future. Or if it’s a more long-term problem, they may be able to extend the term of your mortgage or switch you to paying interest only to reduce the monthly payment (this does mean that you are not actually paying off any of the original loan just the interest element of it and the lender will still require the repayment of the loan amount at the end of the term). The lender will want to help you resolve the problem rather than starting the repossession procedure.
Repossession is a legal process where a lender is entitled (if you do not keep up your repayments) to take ownership of the property the loan is secured against. Your case will go to court where a judge will make a decision on whether your home can be repossessed by the lender. The property would then be sold off and the funds used to clear the debt. If the funds are not enough to clear the debt, then you will still be responsible for settling the shortfall. Lenders will only go through the repossession procedure as a last resort as it’s time consuming and expensive.
It’s important to try and not to let the situation get to the repossession stage and there are many agencies that can help you:
Citizens Advice Bureau – www.citizensadvice.org.uk
StepChange Debt Charity – www.stepchange.org
National Debtline - www.mymoneysteps.org
Debt Advice Foundation – www.debtadvicefoundation.org
Shelter – www.england.shelter.org.uk/get_help
Once you have had a home repossessed, your choice of mortgage lenders for the future will be limited and you will be offered interest rates of a higher level as you are seen as a higher risk.
If you are struggling to meet your repayments, please do notify your lender and see if they are able to help you.
Please note the content of this blog is for guidance purposes only and does not constitute for professional advice. Contact us today at firstname.lastname@example.org or by calling 01473 216950.