Remortgage With Arrears

Rising household and fuel costs, coupled with high mortgage repayments, has meant that the cost of running a home has become increasingly expensive. This has resulted in a larger number of borrowers missing mortgage payments and falling into arrears with their lender.

Recent figures published by the Financial Services Authority (FSA) show that the number of home loans in arrears increased by 15% in the first 3 months of 2008.

Arrears Explained

Arrears are mortgage payments that either haven’t been paid in full or on time, or have been missed completely.

If you find yourself experiencing difficulty meeting your mortgage payments due to mounting debts, you need to act quickly. Most lenders will charge a penalty fee if you miss payments, further increasing the size of your debt. Don’t wait until the debt becomes unmanageable, even if your financial problems are only temporary.

Suffering from Arrears?

If you’re finding yourself falling behind with your mortgage repayments the first thing to do is to speak to your lender. Explain that you are experiencing difficulty meeting the required mortgage payments, but are seeking professional advice. Having a clear plan how to clear the outstanding arrears, and meet any future payments until the mortgage is cleared, is very important.

Even if you have mounting debts with other credit agreements, ensure your mortgage repayments are a priority. Having your property repossessed will only make the debt problems worse, so it’s critical to try and stop your mortgage arrears from rising too quickly. Repaying as much as you can afford will also show your lender that you are trying to tackle the problem.

Remortgaging is a possible option that can help people who are finding themselves with high outstanding arrears. Remortgages can offer a number of benefits to people in this situation:

Lower mortgage payments
Ability to increase the length of the mortgage term. This will reduce the monthly repayments, allowing the borrower to get their feet back on the ground.

Debt consolidation
Consider using the equity stored in the property to consolidate debts. Releasing any cash stored in your home to pay off any unsecured loans, credit cards or store cards can decrease the total amount of interest you pay and can reduce your outgoings into one more manageable monthly payment.

When considering a remortgage, it is important to think carefully before securing other debts against your home. Your home may be at risk if you fail to keep up repayments on your mortgage.