Coping with mortgage arrears

October 10, 2014

Seeing your mortgage arrears increase and your overall debt levels rise along with them can be extremely stressful and upsetting. Particularly for families but for anyone who’s concerned that they may struggle to keep a roof over their heads.

It’s important to realise that eviction only happens to a relatively small number of people each year, although there are always many thousands of individuals and families across Scotland struggling to make their monthly mortgage payments or to catch up with their arrears in the same context.

What can you do?

If you are finding it difficult to make your mortgage payments or you are starting to find your mortgage impossible to pay off each month then the first thing to do is assess your financial position. Even if you are generally not great at budgeting or finding ways of saving money, it is well worth making every effort to cut your costs each month if it means you can afford your mortgage payments.

If you have become unable to cover your mortgage because other personal debts are getting in the way and leaving you with too much of a financial burden then you ought to speak to a debt solutions expert. There could be options open to you that mean you can bring down the amount of money you have to pay your creditors every month, with a view then to making sure you can make your mortgage payments on time in future.

Making arrangements

The key to finding a way out of your arrears as a mortgage borrower is communicating effectively with your lender. There will come a point at which your lender can no longer realistically expect that you will be able to meet your payment obligations but they will generally be keen to cooperate with you until that point is reached.

What are your options?

If you are realistically able to afford your mortgage as it stands and you’re keen to pay off your mortgage arrears as soon as possible then there is scope to reach an agreement to that effect with your lender.

It could be that you will be allowed to pay extra amounts of money each month until you settle your arrears but you should only attempt this if your finances are able to cope with the added pressure. What you should be aiming to do is find an approach that can be sustained until your arrears are settled rather than one that has to be repeatedly revisited and revised.

Another option is to capitalise your arrears, which essentially means adding the value of your arrears to the overall amount outstanding on your mortgage. If you choose this route as a way of dealing with your arrears then it could be that you’ll end up paying more for your mortgage than you intended and over a longer period of time.

You can also offer to settle the arrears you’ve racked up in relation to your mortgage through a single lump sum payment. Clearly, this isn’t likely to be an option for many people who have been unable to keep up with their mortgage payments but where it is possible then it should be considered. Taking out a personal loan of some kind under these circumstances can help resolve issues with mortgage arrears but this should only be considered in the broader context of an overall debt management strategy.

Seek advice and guidance

Different circumstances will involve or require particular approaches to be taken when it comes to paying off mortgage arrears but borrowers should always aim to ensure they have a full sense of clarity about how their finances will be impacted. This is where Scotland Debt Solutions can help because we have teams of expert personal finance and debt advisors on hand to answer any questions you might have.

As with any form of personal debt, if your mortgage arrears are starting to become increasingly worrisome and you’re struggling to fend off your creditors then it’s important to take action as early as possible. Ignoring your issues usually means burying your head in the sand which is, potentially, much more damaging to your overall financial position.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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