Arrears

This means getting behind with payments – be it mortgage, rent, rates or whatever. In a nutshell, you should try to budget carefully to avoid getting into arrears. If a real emergency crops up, do not panic but please take advice immediately. Talk to your Financial Adviser or ask the local Citizen’s Advice Bureaux to recommend somebody: many now run a Money Advice Service. With the best will in the world these comments can only give you very general advice about home buying and selling. In the worst case that may be your best option, but please take appropriate advice early on.

Remember there is more to buying a home of your own than just repaying the mortgage, apart from the service charges – electricity, gas, water, etc. – you will be paying council tax to the Local Authority and bear in mind that your investment will from time to time require preventive maintenance and repair, costing you more money.

Arguably the most important commitment of all is the mortgage payment. If you miss one please make sure that you put it right the next month. Ideally drop the lender a note to explain the problem and apologise.

If you look like missing a second payment talk to the lenders in advance of this happening – do not wait until you get a warning letter from their administration unit, as by then your name will be in the system as a defaulter. Should a third payment be missed you could be in real trouble. Depending upon the terms of your particular mortgage agreement the lender may be able to increase your interest rates with immediate effects. Or even take steps to have you evicted from the property. It is at this point you will start to lose control. Do not ignore the warning correspondence tempting as that may be! This will only make matters worse. If you adopt a responsible attitude, explain your problems and negotiate carefully you are far less likely to be taken to court.

At this stage you really must talk to an experienced financial adviser or debt counsellor. If you need an introduction please give us a ring and we will suggest the name of a local practitioner.

There are many options that can be explored. For a start we can provide an idea of the current market value of the property. If that has increased significantly it may open up other possibilities. This greater margin might well enable you to restructure the mortgage and make up the missed payments in other ways. But we stress that you must take expert advice first.

So to recap, whatever you do, please treat the mortgage payments as a priority. Not only is your home at risk but if you were evicted this can be more stressful than going bankrupt and effect you for many more years.