The Financial Services Authority (FSA) has reported that the number of people who were at least three months behind with their mortgage repayments is 16% up on last year. At the same time the number of repossessions rose by 71 per cent. So if you are finding it difficult to pay the mortgage, you are not alone! But if you are facing repossession, that will be of little solice.
Repossession is your lender's ultimate sanction in their quest to recover the money they lent on your house. However, they do treat it as very much the last resort. A move only to be explored, once all other options to reach a solution have been explored.
The Government has introduced new guidelines to make repossession even more of a last resort, but repossession is still a major risk if you fall into arrears. By communicating effectively with your mortgage lender and taking early action, you should be able to come to a solution before matters get this far.
Unplanned and dramatic life changes can cause people to struggle with their mortgage payments. According to the Citizens Advice Bureau, becoming unemployed or your business failing is the most common reason people fall into mortgate arrears. A manageable monthly payment then suddenly becomes unaffordable as their income is abruptly reduced. Other common causes are bereavement and divorce.
Another critical time has been the end of a mortgage deal, such as a highly discounted rate. The low interest rates resulting from the credit crunch and recession have reduced this problem in comparision with the situation 2 years or so ago but we are still seeing the situiation where even a move onto the current levels of Standard Variable Rate (SVR) from a previously very low discounted rate, are resulting in an increase in household outgoings.
So if you do get into financial difficulty, here are some of the key things to bear in mind: When dealing with your mortgage lender, it is important to be clear and straightforward; It is essential not to ignore letters and enquiries; It is in their interest as well as yours to reach a negotiated settlement; By writing to your lender and providing financial details you reduce the likelihood of repossession.
Remember, if the lender is unwilling to agree to your proposed repayment plan, it might still bring repossession proceedings. But you will be in a much stronger position when the case comes to court.
If you do get into financial trouble and you just cannot see how to cope, you can get free advice from Citizens Advice Bureau, the National Debtline, the Consumer Credit Counselling Service and Shelter. There are also a wide range of independent debt advisers who can assist you. Just search online for "debt advice" and you will find what you need.
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