Mortgage & Rent Arrears
Mortgage & Rent Arrears
We could write off up to 85% of your unaffordable debt
Table of Contents
What Are Mortgage Arrears?
Most people who own their own home, do so with a mortgage. This is a long-term loan, often over the course of 25-30 years, which allows people to borrow sums large enough to cover most of the costs of buying a house.
Home buyers will usually need to provide a deposit of upwards of 10% of the value of the property, leaving them with the remaining 90% or less to pay over the course of the agreement.
Mortgage repayments are normally taken every month and are usually one of the largest outgoings people have. This can make them difficult to pay for people who are going through financial hardships.
What Are Rent Arrears?
A rental agreement takes place between a landlord and tenant, where the landlord allows the tenant to live in a property in return for a monthly payment. The tenant will never own the property.
Monthly rental payments can often represent one of the largest monthly payments in a person’s finances. This means that, if circumstances change for the worse e.g job loss or a family emergency, then failure to pay rent can lead to rapidly increasing rent arrears.
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How Do You Deal with Mortgage and Rent Arrears?
As with most types of debt, it is important to contact your lender or landlord and be honest and upfront about your situation. It may be a good idea to go through your finances or budget and seriously think about how much you can afford to pay before speaking to them so that you have this information to hand if they ask.
If you have been through your budget, cut as many non-essentials as possible, but are still finding it tough to afford your rent, then this may simply mean your income is too low. If this is the case and you are not already accessing the relevant benefits, then it may be worth investigating whether you qualify for the housing benefit. This a regular payment made towards your housing costs. It can be back dated for up to six months, so it could be an effective way of clearing some or all your rent arrears.
You could even ask for an Alternative Payment Arrangement, meaning the payment could be made directly to your landlord.
For someone with a mortgage, the person listed on the mortgage agreement is responsible for the debt.
What Might Happen If I Fall Behind With My Mortgage or Rent?
The most serious consequence for not keeping up with mortgage payments is repossession. With a mortgage, you do own your home, but only if you keep to the agreement of paying your monthly amount.
Lenders will always contact you in writing with a demand for payment, but it is always worth noting that there are various steps your lender should take before there is any risk of repossession:
- Consider any request from you to change the way you pay your mortgage
- Offer you the chance to pay off your missed repayments if you wish to
- Begin legal action to repossess your home.
This last step is always the final resort and lenders will often try to work with you to resolve the issue before it comes to this.
The rental equivalent of repossession is seeking possession.
This is a set procedure that the landlord must follow. It begins with them writing to you informing you of when they would like you to move out of the property. If you refuse to leave on the date given then the landlord can take you to court to reclaim the lost rent and seek a possession order and warrant of possession. This allows the court to use bailiffs to force the eviction.
How Can I Get Help With My Mortgage or Rent Arrears?
The prospect of losing your home, whether a property you own or rent, can be a frightening one.
If you have a combination of secured and unsecured debts and live in England, Wales or Northern Ireland, then applying for an IVA may reduce your monthly outgoings enough to cope with your secured debt repayments.
If you live in Scotland then a Trust Deed is your equivalent solution.
If you only have secured debts and live in England, Wales or Northern Ireland, then the following solutions may work for you:
If you live in Scotland, then you could apply for: