Monday, 3 August 2009

Seven ways to deal with mortgage arrears debt

posted by debts.org at 23:59

Debt problems can become serious debt problems within just a few months if you are in arrears with your mortgage. Here are seven ways to reduce the risk of home repossession and give you a debt free future:

1. Pay off arrears quickly

Start to repay your mortgage arrears as quickly as possible as arrears can lead to extra charges, which will increase the amount you owe. If you arrange to pay off mortgage arrears quickly, you will have more money in the long run and you can avoid serious debt problems.

2. Extra mortgage payments to avoid debt problems

If you can make extra mortgage payments, then do so. You can avoid serious debt and serious mortgage debt by paying a bit extra each month to pay off your arrears. Your mortgage lender will probably be in agreement with this, as long as you are making an effort to clear your debts.

3. Include the arrears in the mortgage

You may already have a debt management plan arranged, and you may be facing up to more debt with mortgage arrears. Ask your lender if he can add your mortgage arrears to your total mortgage balance, which will spread the arrears over the period left on your mortgage. This will mean that your monthly payments will increase, but will give you some breathing space. You can get free advice from debt management companies about re-mortgaging, bankruptcy, debt management plans and individual voluntary arrangements.

4. Extend the mortgage to solve debt problems

If you have a repayment mortgage which you have been paying back for a long time, you could ask your lender to extend the term to 25 years again for the remaining amount. This means your monthly payments will reduce but you will be making them for longer, possibly into retirement. Make sure you understand the implications of extending the time of your mortgage before signing anything. This is not an easy way out as the money will still have to be paid back at some stage.

5. Delay mortgage arrears to help solve immediate debt

If you are suffering debt problems, and struggling to pay your mortgage arrears, ask your mortgage lender if you can delay paying arrears for a certain amount of time. Debt problems in the UK are increasing and you should talk to an independent debt advice company if you are struggling to make ends meet.

6. Payment holiday for mortgage debt

If you have an interest only mortgage, you may consider taking a payment holiday if your lender will allow it. This means that if you have an endowment policy which is linked to your mortgage, ask the endowment company if you can stop paying in for a limited period of time.

7. Selling your endowment policy

If your endowment policy has been running for several years, you could use the amount in the policy to pay off your mortgage arrears. You can cash in or sell the policy after taking advice from the mortgage lender and the endowment policy company. Make sure it is worth your while, as, if you cash in your endowment policy early, you could be losing out on a much bigger cash sum when it matures. Thousands of people get into serious debt every year in the UK by cashing in endowment policies early, only to find there are other ways to solve their debt problems.

If you are suffering debt problems and feel there is nowhere to turn, or you want some friendly and professional advice about debt management plans, individual voluntary arrangements or bankruptcy, or if you want to reclaim unfair bank charges in Liverpool, Leeds, Peterborough, Middlesbrough, Lincoln, Grantham, Burnley, Manchester, Poole, Sunderland, Huddersfield, Mansfield, Nottingham, Ipswich, Telford, Milton Keynes, Derby, Northampton, Portsmouth, Luton, Preston, Telford, York, Stockport, Brighton, Hull, Bradford, Wolverhampton, Scunthorpe, Carlisle, Swindon, Stoke or any town or city in the UK,contact debts.org free on 0844 277 7999 or fill in the online claim form.

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