Impact of Late Mortgage Payments

No matter how well you plan, or how hard you work, life can throw a curved ball at you, leaving you and your finances gasping for air. You may have lost your job, had a serious illness or accident, endured a relationship break-up: whatever the circumstances, you suddenly find yourself ‘in arrears’. ‘Mortgage in arrears’ means a missed, late or overdue payment. This is a very serious situation, and one that requires your immediate action.

Banks and mortgage lenders view home loan arrears very seriously. They are actually entitled to repossess your home and sell it to recover their money. Contrary to some horror stories, they don’t like doing this; they much prefer that you keep up with your payments so you, and they, can enjoy a stress-free life. There is a set process that they have to adhere to by law before they can re-possess your property.

Remember also that your record of missed payments will contribute to a ‘poor credit history’, which can follow you for a very long time, impacting your ability to obtain any type of credit, from home loans to credit cards, store cards, car loans or personal loans.

Don’t Hide: Take Action and Sort It Out

If you encounter a minor problem with your finances, you should contact your lender immediately. If you are confident you will be able to make a late payment, then get back on track with your repayment commitments, it’s likely the lender will be able to accommodate your needs and there are various methods that the lenders can use that can give you time to sort things out such as repayment holidays or re-amortizing the loan to reduce payments. Under the NCCP consumer credit code, the mainstream lenders are obliged to help you to a degree.

If, however, you have little chance of meeting your obligations for many months, you must act immediately. This will probably mean refinancing, possibly a complete financial overhaul. As painful as this may be, your future well-being does depend on it. The longer you postpone action, the more your debts will pile up, exacerbated by bank fees and legal fees.

While banks and other prime lenders will be unlikely to accept a borrower who has a history of payments in arrears, there are specialist Home loans for bad credit brokers and lenders you can turn to. A specialist broker will also consider your particular situation and advise you on the best course of action, including helping to select the most appropriate lender for you.

There’s no point in refinancing if you won’t be able to meet the new payment terms. In this case, you will be advised to sell your home as soon as possible to clear your debt. Any equity in your property may help you to start again when you are able to.

Expert Help Can Make a Difference

If, however, refinancing will enable you to establish a workable repayment plan, the chances are your home will be saved, and you can move on confidently. This might mean refinancing over a longer period, enabling you to make smaller repayments. It might also mean consolidating your borrowing, so you can pay off higher interest debts such as credit card debts, which can prevent you from meeting your home loan repayments. To find out more about refinancing a home loan in arrears, click here.

Above all, remember that you are not the first person to run into trouble and there are experts who can help. Take action immediately and you give yourself the best chance of a happy outcome.