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Mortgage crisis: 3 things that can help you

News that over 750,000 people risk defaulting on their mortgage will worry Britain’s housing market and the nation. While lenders are duty-bound to help their customers who are falling behind on payments, at some point, if payments can’t be paid, repossessions will eventually take place.

Considering a repossession is disastrous for someone, lenders typically want to avoid this process; it is also costly for them as trying to recoup money from a sale has its costs and can prove lengthy. If many repossessions co-occur, several properties come to market, driving up supply while demand lags, pushing down house prices.

The accurate scale of the cost-of-living crisis and its hugely damaging impact is starting to be bare. However, some rays of sunshine are breaking through a very stormy sky, and mortgage rates look set to stabilise towards the end of 2023, as inflation is predicted to drop. However, this may prove too little, too late for some who will find the payments increase impossible.

Maintain communication with your landlord

Lenders will generally write to you within 15 days of a missed payment, but if you are struggling with your bill, you must talk to your lender before they contact you. Mortgage debt is described as a priority debt and, as the name implies, should be prioritised above most other types of debt you have.

Think of a feasible solution

Before picking up the phone with your lender, take some time to work out exactly how much you can afford to pay back each month. Budgeting tools are available online, or you could speak to a debt charity or Citizens Advice. If you have sought help, do let your lender know, as showing that you have looked at ways of paying back your debt shows you’re serious about it and can help avoid repossession orders down the line.

Reach a payment agreement

Lenders must act fairly with customers who are having difficulties. Having a frank conversation with your lender can help them find a way for you to avoid the problem spiralling out of control. Lenders might be able to put you on a payment plan based on what you can afford to pay back. This could mean providing options to extend your mortgage term, or if your home is worth more than the mortgage, you might be given the option of adding your arrears to the total amount you owe and paying it back over the lifetime of the mortgage.

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