Mortgage Arrears explained and solutions available for getting back on track!
Mortgage Arrears occur when a borrower struggles to keep up with their mortgage payments.
"Starting to feel there's a light at the end of the tunnel, thank you"
Mr G., Oakwood, Derby
This page Mortgage Arrears explained takes a closer look at the difficulties mortgage arrears can cause, and explains the importance of notifying your lender as soon as possible if you are having difficulty keeping up with your mortgage payments, along with assistance on how to keep on track. Finally, if you do have mortgage arrears, we look at potential solutions as to how Shire Direct may well be able to help you!
Table of Contents:
What are Mortgage Arrears?
As we previously identified, Mortgage Arrears occur when a borrower struggles to maintain their mortgage payments. When this happens the borrower 'falls into arrears'. At this stage it is essential that the borrower acts quickly. Failure to do so could mean that the borrowers home is repossessed by the mortgage lender.
A mortgage is like any other loan - apart from one major feature, it is secured on your home.
So, if you're struggling to maintain your mortgage payments, or you're worried you may fall behind, it's important that you discuss your circumstances with your lender as soon as possible. The longer the situation remains unchecked, the higher the arrears will grow, not only from missed payments, but also from compound interest and unpaid direct debit fees.
Most mortgage lenders are keen to help their customers sort out their payment difficulties, and you may be able to agree a plan to reduce your payments for a set period; or if you have a capital repayment mortgage, you may be able to pay interest only for a while; or extend your mortgage term to reduce your payments.
Because your mortgage is secured, if you have encountered financial difficulties, it is most important that you give your mortgage loan priority over any other unsecured debts. Always pay what you can afford - this will also reduce the interest you'll be charged.
What if I already have serious mortgage arrears, and my lender is threatening action?
So, if you find yourself in a situation where you need to catch up on your mortgage payments, it may be sensible to consider a complete financial restructure in order to reduce your outgoings. Our lending panels include specialist mortgage lenders who will consider applications from borrowers regardless of the extent of arrears on their mortgage. It is important to note, however, that the more payments you have missed the higher risk you will be to a new lender, and as a result you may not qualify for the most competitive deals if you leave the problem for too long.
By remortgaging your home, it may be possible to release sufficient equity to pay off the arrears that have accumulated on your mortgage, as well as consolidating any other credit commitments that may be affecting the affordability of your outgoings.
How can I keep on track and can Shire Direct help if I have Mortgage Arrears?
It's very important that you recognise how you ended up in a financial pickle, and if possible take measures to ensure you avoid any similar mistakes in the future! A Shire Direct Mortgage Advisor is trained to carefully examine your circumstances, establish how you arrived at the situation, and to help you to understand how to prevent a recurrence of similar circumstances wherever possible.
If you have fallen into arrears with your mortgage as a result of loss of income, either from illness, an accident or becoming unemployed; it may well be that you had not protected yourself with insurance cover. Naturally, our Advisors will carefully check to see how this can be avoided in the future.
It may well be that you have financially over-committed yourself. Our Advisors will assess your income and expenditure, now and into the future, by reviewing your financial situation. Many mortgage arrears problems have been caused as a result of borrowers taking advantage of easy credit on loans, HP and credit cards.
We'll help you draw-up a new budget so that you can afford to live, and help you prioritise your commitments. We'll also arrange with you to undertake regular reviews after we have completed this transaction for you, and wherever possible, to improve your interest rate when appropriate.
So to re-emphasise, it really is vital that you act quickly if you find yourself in difficult financial circumstances, especially with mortgage arrears. Please don't hesitate to contact us here at Shire Direct, and one of our friendly, professionally qualified Mortgage Advisors will be only too happy to help you through this difficult time. Whatever you do, don't stick your head in the sand, this situation could be serious, we'll help you to confront it and hopefully provide a suitable solution for you. Call us on our Freephone number 08000 282 281, our lines are open 7 days a week from 8am until 10pm including weekends, or why not enquire online anytime - our aim is to help in any way we can.
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.
Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.