Helpful tips on dealing with mortgage arrears

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The term arrears refers to an individual falling behind with contractual repayments to a lender or creditor and applies to all types of finance products from mortgages and personal loans through to credit cards and hire purchase agreements.

If an individual is worried about falling behind with their repayments it is vital that the lender or creditor is notified. The Law permits that all customers must be treated fairly and that the lender or creditor must take into account personal circumstances which affect an individual’s ability to meet such commitments.

So how can the lender or creditor help?

All lenders or creditors have procedures in place to assist individuals with repayment difficulties and depending on the circumstances have the flexibility to allow the late or potentially missed payment to be made up over an agreed time frame by adding a percentage to the outstanding amount to the normal repayment per calendar month or by adding the late payment to the end of the agreed repayment term. Other options might mean the individual could take a payment holiday providing a short term window to address the problem or opt for a reduced repayment period.

Already fallen into arrears?

Maintaining regular dialog with the lender or creditor is essential, an individual is more likely to be treated sympathetically if they are willing to address the problem. Offering part payments or what the budget will allow towards meeting contractual obligations will reduce the arrears and any subsequent charges that may apply.

In the case of mortgage arrears the lender may even switch the repayment terms to interest only to reducing the repayments for a set period but do bear in mind this will mean extending the term of the debt as the actual capital borrowed is not being repaid.

Seek professional advice...

Before considering your options on issues that may affect your short or long term financial stability it makes perfect sense to seek professional advice on your situation and consult:

National Debtline (Mortgage Arrears): more information (opens in new window)

An Independant Financial Advisor: more information

The Citizens Advice Bureau: more information

The overal cost for comparison is 8.8% APR - The actual rate available will depend your on circumstances at the time of application - Ask for a personalised illustration

Get your free consultation from our appointed adverse specialists: more information