Dealing with priority debts: mortgage arrears

YOUR PROPERTY CAN BE REPOSSESSED IF YOU DO NOT PAY YOUR MORTGAGE.

If you're in arrears with mortgage repayments, you should contact your lender as soon as possible.


Making contact
Though it is becoming increasingly rare, it is worth checking if you have mortgage protection insurance: this will usually cover periods when you are unable to make payments due to circumstances outside of your control.

When you contact your lender, you should explain why you have failed to make your payments (the circumstances that have led to your financial difficulties) and how you intend to pay them (for example, paying smaller instalments).

You may be able to negotiate with your bank to make smaller monthly payments. Alternatively, you could suggest that the amount of the arrears is added to the original sum borrowed and, thus, becomes part of the amount borrowed (however, this would have the effect of increasing your monthly repayments to take account of the additional sum).

Some lenders will impose financial penalties for late payments, or ongoing penalties over the term that payments are in arrears. If this is the case, you should request that your lender waive these charges for the time being.


Additional considerations
If you are in receipt of any of the following benefits, you may be entitled for payments to be made on your mortgage interest. 

• Job Seekers' Allowance
• Income Support
• Guarantee credit of Pension Credit

Note that only the interest is paid by such benefits, and is paid directly to the lender.