Are you finding it difficult to meet your mortgage repayments?

Or maybe you have already missed one or more installments? Ignoring the situation is sure to make things worse. The sooner you take action to deal with it the better.

If you have mortgage arrears, your mortgage lender will want you to clear them. If you don’t do this, they will take action through the courts to get you evicted from your home. This will allow them to sell the property and use the money from the sale to help pay off the debt. However, if your lender knows that you are trying your best to stop the debt increasing, they might allow you more time to sort out the problem. Depending on your circumstances, there may be several things you can do though it is always best to act quickly. Your local CAB can help.

You will need to make a written offer to your mortgage lender which shows how you intend to pay off the mortgage and any arrears either by instalments you can afford or some other means. You might seek advice from an experienced debt adviser to help you prepare a financial statement which shows how you have worked this out. Try and persuade your mortgage lender that accepting an offer worked out in this way is in both your interests, because you are more likely to keep to it.

You could ask your lender to consider:
– reducing your repayments for a limited period if you have a short term difficulty
– reducing your monthly interest payments
– increasing the period of time over which the mortgage is paid (this would mean paying more interest in the long term)
– suspending repayment of the amount you borrowed (the capital) and make interest-only payments
– reducing (or even stopping) the payments on your endowment policy if you have an endowment mortgage (making any changes to an endowment policy can be complicated and financially risky and should only be undertaken with the benefit of independent financial advice)
– arranging to have the arrears added to your capital and paid back over the remaining period of the mortgage (taking this option, you will end up paying a much larger amount in total)

Other things you can do include
• Seeing if there are ways you can increase your income to help you deal with these and other debts.
• Making sure you’re getting all the welfare benefits and tax credits to which you’re entitled. Some benefits entitle you to an allowance which will pay some of your mortgage costs.
• Starting to make regular payments straight away, however small. Even if your lender doesn’t accept your offer, it may help your case if you are taken to court later on.

Also, bear in mind that:

– your mortgage lender should not start court action against you without following certain rules laid down by the Financial Services Authority (FSA). The rules say that your mortgage lender must treat you fairly and give you a reasonable chance to make arrangements to pay off the arrears, if you are able to. They must consider any reasonable request from you to change when or how you pay. Your mortgage lender should only start court action as a last resort, if all other attempts to collect the arrears have failed.
– if you sell your house you will get a lot more for it than your lender will after you have been evicted. You might need to get permission from your lender to sell the property.
– sale and rent back schemes run by private companies involve a number of risks. Mortgage rescue schemes run by local authorities or housing associations are generally better. In England, there is also a government-backed mortgage rescue scheme which helps vulnerable homeowners (you will need to find out whether you qualify for this scheme)
– you won’t gain anything by just leaving the property and handing back the keys to your mortgage lender (unless you’ve sold the property or there is a court order to evict you). You will still be responsible for mortgage payments and buildings insurance until the property is sold, and will still have to make up any shortfall if the sale doesn’t make enough to cover what you owe.

If you require advice on dealing with mortgage arrears or court proceedings or if you want to complain about the way in which your mortgage lender has behaved call the Citizens Advice Waverley helpline on 0844 848 7969. Indeed if you experience any problem concerning benefits, housing, legal matters, discrimination, employment, immigration or consumer issues which you would like to discuss, advice is available at our four bureau in Cranleigh, Farnham, Godalming and Haslemere. See our website for opening times at www.waverleycab.org.uk/face-to-face or call our helpline on 0844 848 7969.

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