Mortgage and Rent Arrears
Falling behind with your mortgage or rent payments could ultimately result in the loss of your home, so it is vital to seek help before the situation gets out of hand. Mortgage and rent arrears are high priority debts, and your lender or landlord will expect you to inform them if you are experiencing difficulty in meeting your contractual obligations.
UK Debt helps people in financial distress to deal with burgeoning debt. We offer unbiased professional advice and support to help you avoid a potentially disastrous situation. So what should you do initially if you are in arrears with your mortgage or rent?
Contact your lender or landlord
It is important to inform your lender as soon as you know you will not be able to make a repayment. Failing to let them know about your financial position will only inflame the situation, especially if you have already missed several payments.
If you rent a property, your landlord will also need to know that you are struggling to pay. If you look through your lease agreement, there may be some indication of the action they can legally take under these circumstances.
The landlord may be able to evict you after a certain number of missed payments, for example, but eviction is likely to be a measure of last resort if you have previously been a reliable tenant.
So what are some of the options that might be available to you if you have arrears with your mortgage lender or landlord?
Mortgage Payment Protection Insurance (MPPI)
If you have Mortgage Payment Protection Insurance, it will provide a valuable breathing space until you seek a longer-term remedy.
Support for Mortgage Interest (SMI)
This is a government scheme that could pay your mortgage interest in the form of a loan that you pay back when you sell the property.
Payment break or interest-only mortgage
Your lender may allow a payment break of a few months to help you get back on track, or possibly offer you a temporary interest-only mortgage.
Negotiating with your landlord
The landlord may be willing to negotiate a lower rental for a short-term. This would benefit you, but also your landlord as they could avoid the expensive process of searching for a new tenant.
If you have a low income, you may be able to claim benefits that can be paid directly to your landlord.
Pay what you can
Pay as much as you can each month – this shows that you take your arrears seriously, and are trying to rectify the situation.
How we can help you deal with mortgage or rent arrears
Unofficial repayment plan
If appropriate, we can negotiate on your behalf with your lender or landlord for an affordable instalment plan that would clear your arrears and help you get back on track for the longer-term.
Individual Voluntary Arrangement (IVA)
It is possible to include mortgage and rent arrears within an Individual Voluntary Arrangement (IVA) if your creditor agrees. This official debt solution lets you repay using surplus income over a period of four or five years.
During this time, all interest and charges on your debts are frozen, and any debt remaining at the end of the term is written off. IVAs are particularly suitable if you owe money to multiple creditors, and need to take positive action to prevent bankruptcy.
If you would like to find out more about how to deal with mortgage and rent arrears, speak to one of our licensed insolvency practitioners. We offer free same-day consultations, and can quickly put a plan of action into effect.