Mortgage Arrears

Mortgage arrears can happen for many reasons: unemployment, sickness, marital splits and accidents. The economy is declining and many people are struggling to make repayments.

Penalties and charges

Mortgages that are in arrears collect arrear charges. These charges are from the letters and visits that the lender has to send to the client.
Debt collecting procedure

Most companies have procedures that guide them on how to collect unpaid debt. They may start with a call or a letter to remind the customer about the overdue debt.

• Your creditor writes to you to ask you to pay the arrears
• Your creditor issues a claim for possession of the property. The county court will send it and will give you details of when the court hearing will take place and the case against you
• You’ll receive a notice at least 14 days before the court hearing to say that possession proceedings have started
• A district judge considers your lender's claim against you and any offers you have made to deal with the arrears.
• The judge will decide what action is in everyone’s best interest.
• The creditor makes an application for a warrant for bailiffs to evict you.
• Eviction from the property.

Debt laws

The Financial Services Authority regulates mortgages.

Remedies

Homeowners do have a few options available to them. They should contact their mortgage broker before the repayments on their mortgage gets too much. It’s worthwhile to negotiate a lower interest rate or try to arrange an extended payment period. Failing that, consumers can contact one of the government agencies to help them.

• Check whether you have insurance cover  
• Work out your budget  
• Check if State benefits can help  
• Talk to a free money advice agency  
• Pay what you can afford  
• Find government help

Mortgage Rescue Scheme: The mortgage rescue scheme helps those who need assistance with mortgage repayments.

Homeowners Mortgage Support: The homeowners’ mortgage support may be able to help if you’re having difficulty making mortgage payments as a result of a temporary fall in income.