Getting into trouble with our mortgage repayments has got to be one of the most stressful experiences we may ever have the misfortune to go through. If the situation has arisen due to losing a job or illness then there will be a whole heap of other stressful issues to deal with on top of mortgage arrears and the fear of repossession. Maybe you have simply over committed yourself and a rise in interest rates has left you struggling to pay increased mortgage payments.
However one arrives at a position of struggling to make mortgage repayments, for many people it’s tempting to go into denial about the possibility of bank repossession which is without doubt the worse thing you can do. Unless you take action to remedy the problem and get help with mortgage payment difficulties, that is exactly what will happen.
Times are tough for many of us and tough decisions have to be made but there are many avenues you can take to get your mortgage payments back on track. There are several recommended options for you consider if you are getting into mortgage arrears. Finding out as much as you can about each possibility, will help you make an informed decision about what’s best for you and your family and which solution will work for you.
Places to Get Help with Mortgage Repayments
There are several things you can do to get help with mortgage repayments, prevent repossession and get your finances back in order or at the very least give you a reprieve while a more permanent solution is found. The government has stepped in and it currently runs 3 schemes to help homeowners stay in their homes when they get into mortgage arrears. So start opening your letters, start taking control of the problem and in most cases you will find a way out of it.
Get Help from Your Mortgage Lender
Your mortgage lender should be your first port of call when you need help meeting your mortgage repayments. There are a variety of options they might recommend such as changing to a different type of mortgage e.g. an interest only or a fixed rate mortgage. You might be able to delay your interest payments for a fixed period and have it added on at a later date, extend the length of your mortgage or you could be referred to one of the current government schemes to help homeowners (see below).
Interest Only Mortgages – Interest only mortgages tend to have lower monthly repayments because you are not paying off any of the loan amount, just the interest. When you get back on your feet you can change your mortgage back to a repayment one. The bank may be sending you nasty letters but they would rather you keep your home – so make the call and arrange an appointment with your branch manager to discuss your options.
Fixed Rate Mortgages – Depending on the type of your current mortgage, a fixed rate mortgage could be cheaper for you, especially if your mortgage is of the variable rate sort which fluctuates with the rise and fall of the interest rates set by Bank of England.
Extend the Length of Your Mortgage – Another option is to ask about the possibility of extending the length of your mortgage say from 25 – 30 years. Though in the long run you will pay more for your home due to increased interest over the time of the loan, this will reduce your monthly payments.
Don’t Stop Mortgage Payments - Whatever you do, do not stop paying your mortgage completely – keep paying something regularly, whatever you can afford. Your bank will be more inclined to help you if they feel you are making an effort to keep up your payments.
Get Help from Government Schemes
Since the beginning of the recession in 2008 the UK government has developed several schemes to assist people with mortgage arrears and debt problems. If you’ve been to your bank and already tried everything on offer from them it’s well worth finding out if you qualify for any of these government schemes. Each has strict criteria and some options are pretty drastic, but they could make the difference between you staying in your home or not.
Mortgage Rescue Scheme – If you have dependent children, are pregnant, have a physical or mental impairment or are over retirement age (or someone who lives with you is), you could qualify for the mortgage rescue scheme. The scheme offers either a “shared equity loan”, which allows you to pay a monthly low interest-only payment or a “government mortgage to rent” where your property is bought by a registered social landlord and you stay in your property and pay rent to them (not to be confused with commercial sell and rent back schemes).
Mortgage Support Scheme – The mortgage support scheme is for homeowners who are experiencing a temporary drop in income e.g. because a spouse has lost their job or hours of work have been reduced. This scheme gives help with mortgage repayments by allowing you to defer interest payments on your mortgage for up to two years. You will have to pay the amount deferred back eventually, but it will definitely give you breathing space and time to get back on your feet.
Support for Mortgage Interest – If you are in receipt of (or will be in the near future) income related benefits such as income support, employment and support allowance or job seekers allowance, you may be eligible for Support for Mortgage Interest. This is a benefit that will pay your mortgage interest payments direct to your lender for the time period that you are receiving one of the benefits listed above. Be aware that this scheme will not pay any mortgage arrears you may have accrued.
Help Yourself to Meet Mortgage Repayments
Alongside the other options to get help with mortgage repayments explained here, it’s worth doing a bit of brain storming and begin to think creatively about how you can raise some money to keep you and your family going for a few months and help yourself with your mortgage repayments. Here are a few ideas for you to consider.
Get a Lodger – Do you have a spare room like a dining room or garage you could convert into another bedroom? A boarder or lodger who rents out one room can bring in from £300 – £500 per month. This income is taxable, but it can certainly help towards your mortgage payments and other household bills.
Rent Your House Out and Live Somewhere Cheaper – Rents are at an all time high and the demand for rental property is too, so it’s worth finding out how much you could rent your property out for. Depending on the level of debt you have secured against your home, the rental income could cover the mortgage and your tenants will be responsible for all the bills (except buildings insurance.)
Rent somewhere smaller and cheaper on a temporary basis or even better, move in with a relative or friend for a set period of time. Would your parents, other family members or close friends have spare rooms you could rent from them? The extra money could come in useful for them too.
Get a Second Job - Can you or your partner get a second job at evenings or weekends? If your wife is a stay at home mum could she find a full time job? Even if you have to pay out half her wages in childcare costs you should still have a lot more income than you do now.
Sell Valuable Items - Do you have valuable items you could sell? Antiques, collectibles, jewellery and even old clothes and toys can bring in extra money. If you have a 60 inch TV how much could you get for it? Would it pay a couple of month’s mortgage? What about vehicles you own? Could you sell your car and get a cheaper one?
Consider Your Options
You might decide that some of these options for help with mortgage repayments are for you and some definitely aren’t – that’s ok. The important thing is that you consider each one carefully, don’t write off any ideas until you have given them serious thought.
You want to avoid house repossession at all costs because there are a lot of long term consequences of house repossession that are not very pleasant. The main ones to be aware of are:
- You will find it almost impossible to get another mortgage in your lifetime.
- You will also find it almost impossible to get a loan in your lifetime.
- You will probably lose out financially and still owe the bank money.
- You will not be able to get credit for household items, cars or holidays.
- You may not be able to get an overdraft
- You will not be able to get a credit card
These facts about repossession are not stated to scare you, but to spur you on to get help with your mortgage repayment difficulties. As illustrated in this article there is help out there for those struggling with mortgage arrears, you just need to reach out and find it.