Ten Tips For Homeowners in Mortgage Arrears

1. Face the problem head-on or it will get worse. Face your arrears and you will find a solution.

2. Get out all the paperwork to do with your mortgage or secured loan.

3. Give yourself time and space to look at the situation. Study the paperwork. Knowledge is power. You need a clear understanding of the problem to sort it out. Treat arrears seriously.

4. Find out how much your current monthly instalment is. Has it recently gone up? Is it going to go up soon? What is the interest rate?

5. Be honest in answering these key questions: Can you afford your monthly payment at the moment? Can you afford it over the next few months? Can you afford another increase?

6. Check how many payments you have missed. If you are sure you can afford the payments from now on, but have just had a bad month or two, write to your lender to show you are aware of the missed payments and intend to rectify the situation by making a full payment now and paying the missed payments off over the next six months. For example, if you normally pay £600 but have missed 2 payments, you owe £1200 in arrears. If you pay £200 a month on top of the £600 you normally pay, the arrears of £1200 will be paid off in 6 months. Make this arrangement BEFORE the lender adds charges and costs to the arrears. Most lenders will accept an arrangement like this. But you MUST stick to it.

7. Realise that your mortgage is a priority payment. You should pay this first and then eat. Do NOT make the common mistake of paying unsecured loans, credit cards, store cards and catalogue payments before your mortgage. They might call you six times a day, whereas your lender never calls, but unsecured lenders are NOT as important as your mortgage or secured loan. Shelter first (mortgage, secured loans, council tax and utility bills) then food, basic clothing and transport.

8. Check the total arrears you owe. This may include various charges, fees and court costs and MAY BE A LOT MORE THAN YOU THOUGHT. And the amount will just keep growing unless you do something about it. Say you owe £5000 in total on arrears. What can you do to pay £5000 now? Where can you get £5000 from? Can you cash in your savings or an insurance policy? Can you sell a car, motorbike or caravan? Can you sell household goods? Can you borrow from a family member or friend? (You MUST pay this back.) If you can, pay the arrears off now.

9. Is your lender taking you to court over the arrears?

You must go to the hearing and put the arrangement you want to make before the District Judge. Do not dwell too much on your story, as the hearing is about the arrears, not about you. Not the place for sentiment, but concrete proposals to repay your arrears or pay them off in one go by selling your house. This sounds harsh but you must remember that District Judges may be sympathetic but they have a job to do. They have discretion, but the law is on the side of the lender who is entitled to repossess the house if they do not think they will get payments from you. They cannot repossess without a Warrant of Eviction.

If you need specific advice about your possession case, call Citizens Advice, who oftean have a Welfare Officer who will attend court with you, or email us on support@mortgagerescuescheme.co.uk We can not only offer guidance but also offer practical solutions to arrears problems.

10. Is yours a repayment mortgage, where you (eventually) pay down what you borrowed as well as the interest? Write to your lender and ask for the mortgage to be interest-only for six months to reduce your payments. Lenders like responsible borrowers who make sensible suggestions for payment. Is there a tie-in penalty or early redemption charge? This is often 6% of the amount you borrowed and you have to pay this back if you sell or remortgage your home which will redeem (pay off) your current mortgage. You need to know this. It is a hefty amount to pay back.