Almas Uddin
Founder and Mortgage Advisor
24 Dec 2019
If you are struggling to pay your mortgage, whether it be because of your income, the additional factors such as family or debt or the loss of your job, the consequences are still going to take its toll on you.
The Starting consequences:
Once you miss your mortgage payment, a fee may be passed to you, and it is usually an admin fee paid along with your outstanding mortgage payment.
If this does carry on till the next month (from 16th day), lenders may take action and contact credit bureaus, and this, in turn, can reduce your credit score, discouraging more lenders to actually let you borrow money from them.
If this further carries on after the next month, the mortgage is said to be in default, which means guilty of failing to repay a loan or appear in a law court. From 45-60 days late, a breach/demand letter may appear to your doorstep, reminding you if you do not pay, repossession is a definite possibility.
Serious consequences:
After the 60 days, your credit score takes another hit, reducing it even more, and the letters keep coming in, alerting you how much money you actually owe on the mortgage, and as the days go by, your credit score decreases and decreases. And the process of foreclosure is coming closer and closer.
Varying from lender to lender, it can take between 1-2 years till repossession of the house takes place, and this is when the lender sells the house, in order to cover the cost of the mortgage. Or, the lender will become the owner of the property.
Hearing all this makes you worried, so how can you avoid repossession?
I can recommend you this straight up, TALK TO THE LENDER! Ignoring the letters and the calls will make the situation worse, and if you do talk to the lender, they may offer advice or help to cope with the inability to pay the payment of the mortgage.
If you feel you cannot talk to the lender, write a letter. These letters are what we call holding letters, and within these you should write with ease, explaining your mispayments, and why you’re in the situation in the first place, you should also explain what you tried to do in response to the arrears, and this is because it can show the lender you’re actually trying rather than ignoring it straight. Make dates and days where you can call in order to work together to deal with the arrears.
Doing all of this can help you to speak to people and other lenders, and if you keep contacting the lender and working with I am, it can increase the chances of keeping your home heavily.
Make some sort of payment each month or whenever, making sure you have a decent amount of disposable income to spend on food and other necessities.
Priorities
Look at all your bills, and prioritize them, keeping mortgage at the top, this can help you to organize as to how much you pay for each bill, and also there are various budgeting techniques and tools available on the internet, and these can help you to save and all these combined can assist you in paying back the payments.
The last resort, which has proven for some to be effective is selling the house yourself. This is because it allows you to get the best price in which you possibly can, and this can help you to pay back the arrears. However, selling houses by yourself is very complicated and often people sell it for low prices and are still unable to pay back their mortgage. So I would recommend you talk to someone about selling your house before you actually sell it, as you still may have to pay a lot more.
So, your still paying the arrear, but you may find it rather weird or have a sense of doubt, if you do, check if your lender has followed the rules, and as they are lenders and are dealing with mortgages there are various protocols present in such a process, and to make life easy for you, it will be beneficial for you, the homeowner, to understand them to ensure the lender does not take advantage.
Some of these protocols are called pre-action protocols, and when you are in the arrear, the lender MUST write out the details of the:
-Arrear Amounts
-Amount of mortgage that you owe
-Charges that are added to the arrears or will be added
As I said before some lenders will be happy to help you in these situations, rather than taking it to court, and of course this all depends on the lender and how you, the homeowner, act towards him/her. So if the lender does do this, it will be easier for both of you to respond to the arrears and work together to pay it back.
If more help is needed on such a topic, please contact us Revolution Finance Brokers, and we will help you and work with you step by step, in order to overcome such obstacles.
Contact us now to discuss your personal options, Revolution Finance Brokers specialise in commercial and residential finance in Essex, Kent, London and Hertfordshire.
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