Mortgage Arrears and Missed Payments
Most homeowners make mortgage repayments their highest financial priority. However mortgages can end up unintentionally in arrears for a number of reasons including divorce, unemployment or illness. The situation can then sometimes go unnoticed as lenders are less likely to make contact quickly about missed or late payments as their debt is secured against property. For some, unsecured debts and outstanding credit card payments may take priority over mortgage repayments.
Penalty fees are sometimes charged when payments are missed. When mortgage customers experience difficulties in meeting contractual mortgage obligations, lenders have a code of conduct to follow. They may sometimes arrange a mortgage repayment proposal, called an arrangement to pay. A customer may need to produce a detailed statement of income, outgoings and debts. They may need to explain any plans to increase income or reduce spending as well as discuss how any new mortgage arrangements will affect future payments.
Mortgage payment protection insurance can help prevent the situation arising and more and more people are arranging this when they first take out a mortgage. Repayments are then covered in the event of redundancy, sickness or accident. Insurances may have a qualifying period before they start paying out and there may be constraints on how long they are paid for.
Without insurance however, mortgage arrears can lead to the property being repossessed in the worst case scenario. This does not automatically happen but if threatened with action, advice must immediately be sought. For many more people though, the result of having temporary financial difficulties can be that they are given a bad credit rating which can affect their ability to borrow money far into the future. This can mean having problems getting a mortgage or a re-mortgage, often regardless of their current financial situation. Some lenders may automatically reject an application to borrow money from someone with a poor credit rating. The rejection itself may then in turn be recorded as part of the credit rating which can then make it even more difficult to secure a loan or a mortgage.
However, fair deals on mortgages and re-mortgages are available for those with a history of credit problems but it is a good idea to approach a specialist mortgage provider to avoid damaging a credit rating any further. Our mortgage advisers are experienced in finding the best available mortgage for anyone who has problems recently or in the past. If you would like us to help you to find the right deal for you or for any help and advice, please use our Mortgage Enquiry Form below and one of our experts will contact you. Alternatively, you can give us a call on 0845 108 0505.
