What Should I Do If I Am In Arrears With My Mortgage ?

The Debt Advice Team come across many individuals who are are experiencing financial difficulty and are concerned about the security of their home.

So, we decided to put this article together to offer advice to people with mortgages who are in financial diffculty, or feel that their money issues may escalate leaving them with mortgage arrears on their home.

• Firstly if you are are in arrears or feel that you shortly will be, contact your mortgage as soon as possible, explain your situtation and that you are experiencing financial difficulty and struggling to keep up with the mortgage re-payments. If you contact your mortgage lender by telephone, follow it up with either a letter or fax explaining your situation. Six months (or 12 months if you are a AIB and Bank of Ireland) is the time given to mortgage lenders from the first mortgage arrear before they can apply for re-possession of your home. Don’t ignore this time period, address the situation!

• If you can contribute part of your motgage payment then continue to do so, also check if you have Mortgage Protection Repayment Insurance, this insurance can be used against your mortgage repayments if you are made redundant.

• Find out if you qualify for Mortgage Interest Supplement (MIS) by contacting your local Citizens Information Point via www.citizensinformation.ie or telephone 1890 777 121.

• Keep in contact with your mortgage lender, do not ignore him/her! They are obliged by law to keep in contact with yourself under the Code of Conduct on Mortgage Arrears. They will also in most circumstances agree a reasonable repayment schedule with you before repossession of your home.

• Work out your income and expenditure, and contrast between them to work out your weekly/monthly budget. This will help you work out if you can afford to keep up with the payments on your mortgage and if you can realisticly curb your expenditure. If you feel your income and expenditure is true to your daily living costs, then it is advisible to contact your mortgage lender as soon as possible. You can send a copy to your mortgage lender to prove your financial difficulty. Contact The Debt Advice Team for free advice and assistance when filling out your income and expenditure form.

• On completion of your income and expenditure form make a reasonable offer to your mortgage lender, do not offer him/her a larger offer than what you can realistically afford. Lenders are obliged by law to take into account your other debt and household costs when negotiating a new mortgage payment with yourself.

• Other repayment offers may be made available to you by your mortgage lender, such as; paying the interest only for a period of time until you can afford to continue with your mortgage payments, or spreading your mortgage over a longer period of time, this will decrease the amounts owed on your mortgage each month. Make sure you find out if these options will increase the interest on your  mortgage, and if it will affect your credit rating.

• If you cannot afford make any payments towards your mortgage, ask your mortgage lender if they will capitilise your payments, becoming part of the money borrowed and money paid off over the remainder of the mortgage.
When an agreement has been put in place with your mortgage lender, ensure that he puts it in writing, by law this should be done. Also ensure that you keep log of all communication with your lender. Also ensure your lender when your circumstances change, you will increase your payments if this is reasonably possible.

If negotiations with your mortgage lender is unsuccessful ask to speak to a senior advisor. If you are summoned to court, it will be likely that you will have to pay court costs. Making regular payments of what you can reasliticly afford will balance in your favour, as it shows you are making every effort to keep up with your payments. You should seek independent legal advice if this happen, you may be entitled to free legal aid or advice.

If you feel your only option is to hand your keys back, be aware that you will still be liable for the outstanding debt, including; interest, charges, legal costs and selling of the property.

For free advice in relation to your mortgage and any other outstanding debts, please do not hesitate to contact The Debt Advice Team on 01657 5602 for free advice or to arrange a free local face to face meeting with one of our experienced debt