Many home mortgage payments are at an all time low. However properties are still being repossessed at the rate of 3000 a month. Arrears need to be dealt with swiftly to avoid losing your home.
According to the Council of Mortgage Lenders, approximately 10,000 homes are repossessed each quarter. This is a significant number of families who are affected by the stress and upheaval of losing the roof over their head. With a better understanding of their situation and the remedies available, this number could be significantly reduced.
Vary your mortgage
If you have mortgage arrears or believe that you are struggling to pay your mortgage and are likely to miss a payment, the first thing you should do is speak to your lender. At the beginning of 2009, the government introduced some guidelines to mortgage lenders called the mortgage pre-action protocol. This made some strong suggestions to lenders about how they should work to help customers who fall into arrears.
The pre action protocol requires mortgage lenders to see whether they can agree a variation to the terms of the mortgage agreement to make payments more affordable. This may include adding arrears to the mortgage, changing the agreement to interest only and or extending the life of mortgage to make payments more affordable.
Reduce payments to unsecured debts
Varying your mortgage will help to make mortgage payments more affordable. However, once introduced the revised mortgage payments must be paid. To enable you to afford this, you may have to look at reducing your outgoings in other areas. A key area to consider is your unsecured debt payments.
If reducing the payments on personal loans, credit cards and store card accounts will enable you to maintain your mortgage payments and keep the roof over your head, then this is something you should consider. Monthly payments towards unsecured debt can be reduced by using either a debt management plan or more formal agreement such as an individual voluntary arrangement (IVA).
Of course, using these types of arrangements will have serious effects on your credit rating and ability to borrow in the future. However, if the alternative is the repossession of your home, then these options should certainly be considered seriously.
Consider rented accommodation
If you have looked at all of your options and you simply cannot afford your mortgage, then your best option may be to leave your home under your own terms rather than face a forced repossession process. If you are unable to sell the property, you have the option of simply moving out into rented accommodation and handing the keys back to the mortgage lender.
Your mortgage lender will then act to sell the property so that the outstanding mortgage can be repaid. The significant downside to this process is that the property will normally be sold at below the market rate and may leave a shortfall on the mortgage. You will remain responsible for the payment of this shortfall and the mortgage lender will act to recover it from you. However, this debt then becomes unsecured and as such, can be included in a debt management plan or IVA.
If you find yourself in mortgage arrears, the first priority is to find a way for you to remain in your property and avoid repossession. One of the ways to do this is to speak to your mortgage lender to see if your mortgage can be varied and the monthly payments reduced. However, as important will be to ensure your ability to maintain ongoing payments once they are agreed. To ensure this, you should consider how your other expenses, particularly unsecured debts, can be reduced.
Steve Jackson is a debt adviser from BeatMyDebt.com in the UK. For more quality and unbiased information on Personal Debt Solutions, visit our website at http://www.beatmydebt.com
Article Source: http://EzineArticles.com/?expert=Steve_J_Jackson
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