Published on January 5th, 2016 | by FinanceLoophole0
I Can’t Pay My Mortgage
We get an increasing amount of people who come to us saying “I can’t pay my mortgage any more”. It is not as uncommon as most people think. Many people struggling to meet their repayments are often in arrears and their main fear is that their house could be repossessed.
There are various reasons why people cannot pay their mortgage. Generally, it is due to a substantial change in the personal finances of the person paying the mortgage. This could be because they lose their job, changed a job to a lower wage, divorce, long-term sickness etc.
If you can’t pay your mortgage we can show you how to protect your home from repossession if you’re struggling to meet your regular monthly repayments. We have included where relevant, information about what help is available from the Government.
Can’t Pay My Mortgage What Do I Do
If you are having trouble paying for your mortgage, the first thing you should do is contact your lender and let them know. Do not try to ignore the issue under any circumstances as this will only make the situation worse for you. Your lender does want to help you to meet your repayments but you need to actively engage with them as early as possible when you realise you have a problem with your mortgage payments.
Your lender will be able to discuss various options with you, and can offer suggestions to help you pay your mortgage, such as;
- setting up a temporary payment arrangement
- lengthening the term of your mortgage – this makes repayments more affordable
- or, in some circumstances switching temporarily to interest-only repayments
It is always best to try to keep up a minimum level of repayment – even if it is slightly lower than the level you had originally agreed with your mortgage lender. But don’t do this without first letting your mortgage lender know what you are doing and why you are doing it.
Ok I have Tried All That – What Else Can I do To Pay My Mortgage Debt?
We would always recommend people who are finding it difficult to pay their mortgage to seek debt help. If you are struggling to pay your mortgage it is likely you also have other debts which you are not able to control effectively. It is always advisable to look at all your debts as a whole. In this way you can manage and prioritise them in order of importance.
If you have are having mortgage payment problems with your lender, using a reputable debt management agency will add weight to any suggested change in your mortgage arrangement which you are proposing to your lender. And also if your debt ever gets to court, it can be very helpful to prove that you have been ‘actively’ trying to find a solution to your debts. This could even prevent a court from issuing a repossession order on your home.
There are a number of debt management agencies, some of which are not worth using. However we have had good reports back from people with mortgage debts who have used the Bright Debt Solutions management agency. So give them a try to see if they can help you scope out a suitable debt management proposal that is suitable for your particular debt circumstances. They will provide you with a free assessment of your debt and suggest a suitable solution for you. Let us know how you get on.
Will The Government Pay My Mortgage?
The Government will not pay your mortgage for you if you cannot. There is some limited assistance to help you pay the interest on your mortgage loan but support has been greatly reduced in recent years. The only remaining support is offered by the Government scheme called Support for Mortgage Interest (SMI).
To qualify for SMI you will need to be receiving income support, income-based jobseeker’s allowance (i-JSA), income-based employment & support allowance or pension credit for more than 13 weeks before the SMI payments kick in. So it is important that if you’ve recently lost your job or had an income cut, you sign on. If you do not sign on you won’t be eligible to receive any SMI payments even if you did qualify.
Extra help is available if you are in Scotland, and some councils in Wales, provide extra help for homeowners who are finding it difficult to pay their mortgage.
You can find out more about SMI at: https://www.gov.uk/support-for-mortgage-interest/overview
Can I Pay My Mortgage With A Credit Card
People have regularly asked us if they can pay their mortgage with a credit card if they are having problems paying their mortgage. Our recommendation is that you should be very wary of doing this but some people think that it can be a potential option. However, it is a very risky strategy, especially if you already have debt problems and it can get you into a spiral of debt that can be very hard to get out of. Be very careful about what you are doing or it could end up costing you considerably more money in the long run.
Credit card mortgage payments are only normally used by shrewd consumers who have the right credit card and are looking to get rewards such as air miles from a suitable reward credit card.
Credit card mortgage payments are not recommended as a mortgage debt management option as a credit card is an expensive way to borrow money. To gain any advantage you will normally need to pay off any payments you make on the card in full at the end of each month.
What Happens If I don’t Pay My Mortgage
A mortgage is a personal loan which is secured against your home. This means that if you can’t or won’t pay, your mortgage lender has the right to take your home to pay the money you owe. This is called repossession.
Most lenders will only use repossession as a last resort, they would prefer that you repay the mortgage loan. The financial regulator expects that a mortgage lender will work with you to help you make the repayments. This does not always work, and when it looks inevitable that you are unable to make payments, or you do not communicate with your mortgage lender, it will try to take possession of your home quickly.
If it does this, it will put your home up for auction to get a quick sale. This won’t generally mean they get the best price for your home. If the auction of your home does not cover the amount you still owe them (mortgage shortfall), they will pursue you for the outstanding amount. This shortfall is not a ‘priority debt’ so they cannot remove your possessions to pay for it and they will only be able to pursue you for 12 years to reclaim the mortgage shortfall debt.
If you think that in the long run repossession is inevitable you should take every step you can to sell your home yourself before this happens. In this way you are likely to get a better price than if it goes to auction. This can make all the difference and prevent you still owing your lender money even after your home is sold – and maybe coming out of it with some cash. Another advantage is that you won’t have a repossession registered against you. This would severely affect any future chances of getting a new mortgage for a home.
Complaining About Your Mortgage Provider
If you have done everything you can do to make the mortgage repayments but you feel your mortgage company is still treating you unfairly, you can make a complaint.
The first thing to do is contact your mortgage provider and make a complaint. This will enable your provider the opportunity to fix the issue.
Financial Conduct Authority (FCA) rules require your mortgage lender sends you a written acknowledgement of your complaint within five working days.
Keep a record of any correspondence you have with your lender. If you don’t get a response within 3 weeks, send another letter detailing your complaint against them and ask why they have not responded to your complaint.
If they do not make a decision on your complaint within a month they should contact you to explain why. If you are not satisfied by their response you should refer your complaint to the Financial Ombudsman Service (FOS). Their free and impartial resolution service will take over your complaint for you. It may take a while for them to make a ruling on your complaint. This is especially true if you have a particularly complicated complaint about your lender.
Can’t pay your mortgage debt – insure against loosing your income
You don’t need telling that paying your mortgage is important, as this will prevent you loosing your home and the roof over your head.
It would be devastating to you if you don’t have a family, but if you have a family – that is difficult to think about.
How would your family feel if they ended up on the street because the mortgage did not get paid?
This is particularly important if you loose your income because you suffer from an illness which prevents you from working, or worse still you die suddenly.
That is why many home-owners with a family get family life insurance so that the mortgage payments are secure in the event that the breadwinner dies.
Some people also add on critical illness cover to make sure that the mortgage payments are secure in the event of an illness which prevents them from working.