A mortgage is a loan which is secured on your home – the home acts as collateral which means that if you are unable to repay the mortgage, the lender is legally entitled to take your home instead. However, there are many steps that happen before that including multiple warnings and court action.
What Happens If You Don’t Keep Up With Mortgage Payments?
If you are unable to keep up with your monthly mortgage payments, your lender may charge you for being behind in your payment – this is known as being “in arrears’. These charges are designed to cover any costs that the lender incurs when managing the account while it is in arrears. If you are in mortgage arrears, the lender will want you to clear these as soon as possible. If you do not do this, your mortgage lender could escalate the situation and initiate court action. Depending on how far this goes, it could lead to you losing your home.
What Happens If You Miss One Mortgage Payment?
If you miss one mortgage payment, a lender cannot take drastic action. You can usually speak to your lender directly and explain the situation. However, if you have missed three mortgage payments and are in arrears, your lender could start court proceedings to repossess your home.
What Should I Do If I Cannot Repay My Mortgage?
If you cannot repay your mortgage, the most important thing to do is contact your mortgage provider as soon as possible. Contacting your mortgage provider is the first step that should be taken if you want to avoid losing your home. The majority of mortgage lenders will be willing to reach a new agreement with you and will be open to hearing about why you are unable to repay.
As soon as you think you may have trouble making a repayment, you should contact your lender. Lenders will generally work with you to find a way for you to keep you home. This may include extending your loan term to reduce monthly payments, shift to smaller payments in the short-term or even stop payments for a while (a mortgage payment holiday).
On the off chance that your lender doesn’t accept the offer, you should carry on paying as much as you can. If the lender then decides to take legal action, you could still try to reach an agreement with them and negotiate. Court action is expensive and the mortgage provider will most likely want to avoid it at all costs. It is in everyone’s best interests to come to an agreement and avoid repossession.
What Happens If I’ve Already Missed A Payment?
If you have already missed a repayment, your lender will get in touch with you right away. It is crucial for you to answer their calls as they are likely reaching out to you in an attempt to help you with your repayment plan. According to the law, lenders can only seek repossession after they have made reasonable attempts to resolve the situation. Thus, it is in their best interests to help you reach an agreement and have clear communication and contact with you.
Can I Get Government Help To Pay My Mortgage?
If you are at risk of losing your home and are having real problems trying to repay your mortgage, there might be a government scheme that could help you.
For example, if you are currently collecting benefits including income support, pension credit, income-based jobseeker’s allowance or income-related employment and support allowance, you could get help from the Support for Mortgage Interest (SMI) scheme to help with your mortgage interest payments.