If you are currently struggling to pay your mortgage / rent / bills / debts, there are some key steps you can take to make sure you keep your home from repossession.
The most important step you can take is not to bury your head in the sand and tackle the problem head on. Mounting debts and bills is a scary situation to be in, but in most cases the lenders can actually help you if you contact them direct.
Contact the lender
As soon as you realise you are struggling to pay your mortgage, contact your lender and inform them of your current situation. It is advisable to also get professional debt advice and inform your lender that you are doing this. You may find that your lender will offer some solutions such as:
- Reduce the monthly mortgage payments
- Take a mortgage payment break
- Temporarily convert the mortgage to an interest only mortgage
If you are taken to court, the judge will credit you for contacting the lender and not just ignoring the situation.
Priority debts
Your mortgage is one of the most important debts, if you fail to keep up repayments then you could lose your home, so this makes it much more important than non-priority debts such as credit cards and unsecured loans, for further information read this article: Which Debts To Pay First?
Pay as much as possible
If for instance you have just been made redundant and you have very little spare cash, it is essential that you pay as much as you can towards the mortgage even if it is a very small amount. This demonstrates to your lender that you are committed to the mortgage and will help to limit your arrears. This is why it is important to contact your lender early as they can offer some of the solutions that are above.
Budgeting
You need to work out your current financial situation, we have explained how to do this here: How to Get Out of Debt and Stay Out of Debt, Your First Steps and you can also download a budget calculator here: Free Debt Budget Calculator
With this information you can see your current expenditure and find ways of reducing your current spending. This may mean you have to cut back on some of your luxuries, but this will only be a temporary situation until you are back in control of your mortgage payments.
Once you have worked out what you can realistically afford to pay towards the mortgage arrears, contact the lender and tell them how much you can afford to pay, make sure this is a realistic and affordable amount and then begin paying immediately.
Court hearings
if you are summoned to court, contact your legal advisor immediately, they will help you prepare for court and give you all the advice necessary. When you go to court you'll need to take with you your personal budget, proof of income and copies on all correspondence, this will help the courts to decide what amount you should repay and demonstrate that you are actively trying to solve your debt problems.
The most important tip here is to make sure you do not ignore any letters from your lender or the court, it's important to get organised so that you can demonstrate to the court that you are trying your best to solve your debt problems.
Consolidation Loans - The Dangers
it is highly recommended not to take a Consolidation Loan if you are struggling with your current debts, more often than not this leads you deeper into debt with a much higher risk of losing your home. You can read further information in this article: What is Debt Consolidation? The Hidden Dangers.
Debt advice
Seek professional debt advice. A professional advisor can help you to prepare a budget and will negotiate with the lender on your behalf. A professional debt advisor can also show you the possible debt solutions that are available for your particular situation.
If you are currently struggling to pay your mortgage / rent / bills / debts, there are some key steps you can take to make sure you keep your home from repossession.
The most important step you can take is not to bury your head in the sand and tackle the problem head on. Mounting debts and bills is a scary situation to be in, but in most cases the lenders can actually help you if you contact them direct.
Contact the lender
As soon as you realise you are struggling to pay your mortgage, contact your lender and inform them of your current situation. It is advisable to also get professional debt advice and inform your lender that you are doing this. You may find that your lender will offer some solutions such as:
- Reduce the monthly mortgage payments
- Take a mortgage payment break
- Temporarily convert the mortgage to an interest only mortgage
If you are taken to court, the judge will credit you for contacting the lender and not just ignoring the situation.
Priority debts
Your mortgage is one of the most important debts, if you fail to keep up repayments then you could lose your home, so this makes it much more important than non-priority debts such as credit cards and unsecured loans, for further information read this article: Which Debts To Pay First?
Pay as much as possible
If for instance you have just been made redundant and you have very little spare cash, it is essential that you pay as much as you can towards the mortgage even if it is a very small amount. This demonstrates to your lender that you are committed to the mortgage and will help to limit your arrears. This is why it is important to contact your lender early as they can offer some of the solutions that are above.
Budgeting
You need to work out your current financial situation, we have explained how to do this here: How to Get Out of Debt and Stay Out of Debt, Your First Steps and you can also download a budget calculator here: Free Debt Budget Calculator
With this information you can see your current expenditure and find ways of reducing your current spending. This may mean you have to cut back on some of your luxuries, but this will only be a temporary situation until you are back in control of your mortgage payments.
Once you have worked out what you can realistically afford to pay towards the mortgage arrears, contact the lender and tell them how much you can afford to pay, make sure this is a realistic and affordable amount and then begin paying immediately.
Court hearings
if you are summoned to court, contact your legal advisor immediately, they will help you prepare for court and give you all the advice necessary. When you go to court you'll need to take with you your personal budget, proof of income and copies on all correspondence, this will help the courts to decide what amount you should repay and demonstrate that you are actively trying to solve your debt problems.
The most important tip here is to make sure you do not ignore any letters from your lender or the court, it's important to get organised so that you can demonstrate to the court that you are trying your best to solve your debt problems.
Consolidation Loans - The Dangers
it is highly recommended not to take a Consolidation Loan if you are struggling with your current debts, more often than not this leads you deeper into debt with a much higher risk of losing your home. You can read further information in this article: What is Debt Consolidation? The Hidden Dangers.
Debt advice
Seek professional debt advice. A professional advisor can help you to prepare a budget and will negotiate with the lender on your behalf. A professional debt advisor can also show you the possible debt solutions that are available for your particular situation.