What are mortgage arrears and how should you deal with them?
Currently in the UK many homeowners are finding it difficult to keep up with mortgage loan repayments.
Many have defaulted in payments resulting in mortgage arrears.
For some, their financial situation has deteriorated so much such that there is no ending in sight for their financial woes.
Mortgage loan lenders are also inundated with customers who find themselves unable to manage their debt and who are unable to repay mortgage loans.
Home repossessions seem to be the only solution to this predicament. Even in such a climate, homeowners can still find ways to deal with mortgage arrears that will enable them to keep their homes. Hopefully soon the will be a code of conduct introduced to the UK as there is in Ireland. A guide to dealing with arrears:
1. Ask for a payment holiday from your lender:
One way that as homeowner, you can deal with mortgage arrears, especially where you suddenly find yourself unable to pay-is through consulting with the lender, explaining your financial status and requesting a payment holiday. This is a temporary measure which can assist you only for a few months. This will help you not to worry about monthly payments as you do everything within your power to find a solution. You will still owe the lender and once your financial fortunes improve, you will be expected to cover all your arrears and keep up with your payments. This way you will keep your home.
2. Pay your arrears together with your monthly payments:
In certain circumstances, upon consultation with the lender, the lender may allow you to pay arrears together with your mortgage payments. This is usually so where the arrears are way less than your mortgage debt, or where you are in arrears for a few months. You will therefore contribute towards arrears as you keep up with payments.
3. Rent out your home or a portion thereof:
One can also consider renting out his or her home. When you rent out your home, you can rent out somewhere cheaper or move in with family members or parents and the income from your leased home can go towards paying off your arrears. If moving in with family is not an option, you can rent out a room or a section of your home and use that income to pay your mortgage arrears.
4. Give up your endowment policy:
Another way to deal with mortgage arrears is through giving up your endowment policy or selling it to an investor. This will give you access to a lump sum of money which you can use towards paying off your arrears in one go. It is wise to get financial advice before you do so.
5. Claim against your mortgage insurance protection cover:
If you got into massive debt for one of the reasons or grounds covered by the policy, you can claim against your insurance and use the money to pay off your arrears.