Sharon McDougall - Updated - 6th February 2024 - 2 minutes to read
The recent increase in mortgage interest rates has left many householders in Scotland struggling to meet their monthly repayments. Mortgage payments are priority outgoings that, if not paid, can lead to legal action by lenders and the situation can become serious very quickly.
So what can you do if you can’t afford your mortgage repayments because of the interest rate rises? A variety of options are available, including informal negotiations with your lender and official debt procedures.
You should speak to your lender as soon as you experience problems in paying your mortgage. They could offer various types of help, including reducing your repayments for a few months or making interest-only payments.
There are also specific schemes in place in Scotland to help people deal with mortgage payments.
Get a rough indication of what your monthly repayments might be under each of our different debt solutions.
Mortgage schemes in Scotland
These are just a few of the support schemes available:
Support for Mortgage Interest (SMI)
If you receive certain means-tested benefits, you may be eligible for help to pay all or some of your mortgage interest through the SMI scheme.
Mortgage to Rent
Under this scheme your home is sold to a social landlord and you pay them rent. You’re allowed to continue living in the property, however.
Mortgage to Shared Equity
The Scottish Government purchases a portion of the equity in your home, the benefit being that you pay a reduced mortgage to relieve some of the financial pressure you’re under.
Debt Arrangement Scheme (DAS)
The Debt Arrangement Scheme may be suitable if your overall debts are £5,000 or more. You can include mortgage arrears in this scheme, along with unsecured debts such as credit cards and loans. You’ll have to carry on making your regular mortgage payments, but this may be more achievable if your other debt payments are reduced within DAS.
Scottish Trust Deed
Trust deeds provide an alternative to full bankruptcy in Scotland if you can’t afford to repay your debts in full. Although your mortgage cannot be directly included, a trust deed can help you free up cash that could cover your monthly mortgage expenses. Your essential living costs, including the mortgage, are assessed, and any residual monies used towards the trust deed debts.
Sequestration is the Scottish term for bankruptcy, and is only suitable for people with little likelihood of repaying their debts in the future. Sequestration is an extremely serious step to take and involves you handing over your assets to a Trustee. This, however, does allow you a fresh financial start, and you can become debt-free within six months depending on your circumstances.
You have to obtain professional advice from an accredited money advisor in Scotland before proceeding with any of these personal debt programmes. This ensures that you take the correct route according to your situation.
Scotland Debt Solutions has been helping people in Scotland to overcome debt since 1989, and can provide confidential independent advice on your best options. Please get in touch with our expert team to arrange a free, same-day meeting - we operate a network of offices throughout Scotland.
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Sequestration is the Scottish version of bankruptcy and may be suitable for you if you do not have the money to pay back your debtsFind out More
A Trust Deed involves making a monthly contribution to your debts for up to four years. After this time any remaining debt included in the Trust Deed will not need to be paid.Find out More
A Debt Arrangement Scheme (DAS) lets you pay off your debt through a series of manageable instalments over a reasonable length of time.Find out More
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