Scottish mortgage arrears – how can you prevent repossession?

June 20, 2017

If you’re in arrears with your mortgage, it’s important to know that legal action to repossess it can be delayed or stopped if you act quickly enough. A number of options are available before this stage is reached, so what can you do initially to help with repayments?

Having a spare room that you could rent out might avert repossession, but you must inform the lender of your intentions. Other options include applying for Support for Mortgage Interest (SMI) if you’re already claiming benefits, increasing your income, or reducing your outgoings.

Informal negotiations with the mortgage provider

Being open and honest about your financial situation is vital, especially when it comes to the biggest asset, your home. Let the mortgage lender know as soon as possible when you’re unable to make a repayment.

They’ll appreciate the fact that you’ve been proactive and responsible, and on a practical level may defer the use of penalties and interest for defaulting, which would only serve to increase your debt.

Pay as much as possible towards your mortgage

If you suddenly stop making any contribution towards your mortgage repayments, the lender is more likely to take legal action to minimise their losses. Paying as much as you can demonstrates commitment, and helps to prevent your arrears quickly increasing.

Speak to a professional

Obtaining professional advice about your situation offers a broader perspective, and helps you to understand the actions you should be taking as a priority. You may be able to get advice from a local debt charity, or a firm of insolvency experts such as ourselves, but the moral and professional support offered at this time is invaluable.

Make sure you know your rights

The court will expect your mortgage lender to provide advice and information before applying for repossession, as well as making reasonable attempts to negotiate a revised repayment plan.

Debt Arrangement Scheme (DAS)

The Debt Arrangement Scheme, or DAS, is backed by the Scottish government, and can help your other repayments so you can pay more towards your mortgage. DAS covers only unsecured debt so the mortgage cannot be included, but it’s an indirect way to release more money on a monthly basis, and potentially avert further court action by your mortgage lender.

Home Owners’ Support Fund

Mortgage to Rent

Mortgage to Rent is part of another initiative by the Scottish government, the Home Owners’ Support Fund. Local councils and housing associations purchase property that is earmarked for repossession, and carry out repairs to increase its rental value. If you’re eligible, this could allow you to stay in your home as a tenant.

Mortgage to shared equity

Under this scheme, the government purchases up to 30% of the equity in your home, so reducing the monthly mortgage repayments. You will still have responsibility for its maintenance and repair, but can remain in your home and avoid repossession.

If negotiations fail and you’re unable to reach an agreement, proceedings may begin to repossess your home. Before they apply to the court the lender must send you a ‘calling up notice’ which details the amount owed, and demands its repayment in full within two months.

Scotland Debt Solutions has extensive dealings with mortgage lenders in Scotland. We can advise on your best options and help you navigate your way through a potentially complex situation. Call one of our experts to arrange a free initial meeting at one of four offices around Scotland.

 

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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