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Mortgage Arrears

Mortgage arrears happen when a borrower cannot afford to meet Mortgage repayments each month. Being in arrears is a serious and worrying situation, because each month repayments are required and financial problems can swiftly mount up. Communication between the mortgage lender and the borrower is essential. Consumers that contact their lender in advance of falling into arrears have the ability to jointly plan how to avoid payment difficulties before they occur. Mortgage lenders are interested in helping borrowers out of repayment difficulty so it is often better to be up front as financial situation change. Agreeing a plan of action with a lender in advanced is designed to get the borrower out of payment difficulty, whilst ensuring the lender still receives payment. When an arrears case occurs the lender reviews your payment history and gravity of problem on an individual basis and may suggest one of the following solutions.

All of these have financial implications.
• Reducing repayment levels for a certain period of time
• Providing a ‘payment holiday’
• Increasing mortgage term to spread out repayments over a longer period.

Lenders normally suggest a repayment plan for those borrowers already in arrears to pay off the arrears alongside usual repayments. In some cases if the borrower cannot manage this, the lender will allow a delay on these extra payments. This will depend on payment record.

Finally, a mortgage loan should be considered a priority, as failing to get out of arrears could lead to repossession of your home.