372 people will declare bankruptcy today, and tomorrow and the day after in the United Kingdom. In many of those cases the principal cause is a bad mortgage, which also leads to the borrower losing his or her home. What can you do to avoid becoming a statistic. This two-part article will analyze the main steps you should include in your personal mortgage rescue scheme. Obviously every case is different, so you will need to adapt it to your personal circumstances.

This information is based on the data provided by Direct.gov the UK’s public services website. This guide will help you to put together a simple action plan with one simple and important objective: save your home from a repossession. No matter how dire and hopeless your situation may seem, there is still hope. Even if you can’t keep your home, there are more graceful and financially efficient ways of losing a home than just caving in to a box-standard foreclosure or repossession.

Step 1. Talk to your lender as soon as possible.

This may seem like an obvious step, but it is often one of the last step borrowers will take. This is a huge mistake. You should talk to your lender as soon as you are at risk of falling behind in your payments. The earlier you talk to your lender, the more options your lender will be able to offer you. You see, banks and lenders have the legal obligation to help you. If your home is repossessed, your lender will have to prove in court that a pre-action protocol was followed to give you an opportunity to save your home.

For instance, you lender is under legal obligation of:

- Telling you how much you owe and what interest chargers you have to pay.

- Assess any request you make to repay or refinance your mortgage.

- Give you the reasons why your offer is rejected.

- Providing 15 days warning before they start court action against you due to late mortgage payments.

 

That is all very good you may say, but what can my lender do to help me?

Excellent question. Happily, there is a lot your lender can do to rescue you from a bad mortgage. Your lender can:

- Lengthen the term of your mortgage so you monthly payments are lower. This will increase the overall cost of your mortgage but can help you to keep your home until your financial situation improves.

- Reduce your monthly mortgage payments for a set period of time. For instance, your lender could waive your mortgage payments for 3 to 6 months, if you have been laid off work.

- Refinance any late payments to your mortgage balance. This will increase your interest payments but will give you a clean slate so you can get from under late mortgage payments.

But what if your lender is not cooperating with you, or the help provided is just not enough? There are still things you can do. Read more in our next section.

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