Sadly, today’s economic climate means that unprecedented numbers of us are struggling to meet our financial demands. More homes than ever before are being threatened with repossession, but if you are having trouble keeping up with your mortgage payments, there may be some steps you can explore to avoid the harsh reality of having your home repossessed.
Given that the problem of failing to meet mortgage payments is currently so widespread, the government has stepped in to try to reduce the number of repossessions as far as possible. Lenders are being encouraged to explore all other options before starting repossession proceedings, so your situation may indeed be less grave than you think.
Talk to them
The first point of action if you are worried about failing or know you’re going to fail to meet your mortgage payments, is to contact your mortgage lender as soon as possible.
Even in normal circumstances, i.e. before the current financial crisis, many lenders’ mortgage deals had terms built in to try to help to accommodate people whose financial situations changed. Typically, these terms will be exploited if your income is affected by perhaps losing your job, or having a period of illness, or other problems, preventing you from earning as normal.
The government has recently introduced new rules such that all lenders should now consider the circumstances of people failing to meet their payments differently. One of the options that some lenders may offer you, or indeed that you can ask about, is to have a repayment holiday.
If they grant you this, it means that you can have a break, normally of a couple of months, from paying your mortgage bill. It might not sound like much, but a short break in the payments might just give you the chance to sort your financial situation enough to keep your home.
Another option that lenders are being encouraged to explore, is reducing your monthly repayment amount, most commonly by increasing the term of your mortgage. Of course, this means that you’ll be paying the mortgage off for a longer period of time, but again, a smaller monthly bill may mean you manage to keep your home.
Your lender may also offer other options such as shifting to an interest only mortgage, but you should discuss the details with them, making sure you understand the consequences in the longer term.
Of course, if you do manage to explore one of the options above, you will still need to take extensive steps to sort out the state of your finances.