Getting into difficulties with your mortgage payments can happen easily. Falling into debt is often the result of a change in your circumstances, including illness, a loss of hours, a cut in overtime or a relationship breakdown. Your home can be repossessed if you fall behind on your mortgage, but getting the right help can prevent that from happening.
It’s important that you address any problems you may be having as soon as possible. The worst thing you can do is ignore the problem.
If your income isn’t stretching far enough and you’re worried that you might miss a mortgage payment, don’t wait for your lender to contact you. Let your lender know what’s happening.
A good lender will want to know if you’re having problems, so that you can work together towards a resolution before the situation gets any worse. There are certain steps that your lender has to take before you can be brought to court. If you are in arrears with your mortgage, you will get letters about the arrears from your lender, your lender’s solicitor or from the court.
Letters from your lender
Don’t ignore letters about your mortgage arrears from your mortgage lender. The sooner you address the issue, the more options you may have. If you get a letter or a phone call from your lender, reply.
Take time to really work out your finances. This will help you understand your arrears and see if you can suggest a repayment plan to your lender.
Your lender will usually send you a letter reminding you that you have missed one or two payments. This letter will normally ask you to:
- confirm how you are going to take to catch up on your missed payments
- contact your lender to discuss your situation
Your lender will probably write to you again if the arrears increase or the lender can’t accept your proposal to clear the debt. The second letter usually says that solicitors will be involved if you don’t clear your arrears or contact the lender to explain how you’ll clear them in the next 7 days.
It is better to negotiate with your lender before solicitors are involved. You can get advice from Citizens Advice Somerset if you’re not sure how to start these negotiations.
Letters from your lender's solicitor
The solicitor will usually send you a letter giving you seven days to either pay off all of your arrears or make a proposal for doing so.
This letter is sometimes referred to as Notice to Quit. While it may say that you have 7 days to repay or leave your house, it is in fact the first stage in the legal process of taking possession of your home.
If you have been sent a Notice to Quit, your lender’s solicitor can begin court action without any further warning if they are not satisfied with your response. Try to negotiate at every step of the way and get help from Citizens Advice Somerset if you’re not confident doing this on your own.
The court is more likely to be sympathetic to your situation if you’ve made a real effort to sort things out before legal action begins, even if you weren’t able to come to an agreement with the lender.
Letters from the court
If your lender has started legal action to recover the money you owe or repossess your home, you will get letters from the court to let you know. It’s not always easy to distinguish a court letter from a solicitor’s letter.
If you’re unsure about what your letter means, contact Citizens Advice Somerset. You should take some time to prepare for the court hearing and gather the information and evidence that may support your defence.
Even if you get a letter asking you to attend a court hearing, it’s still not too late to save your home. You may be able to prevent repossession at any stage of the process.
Talk to your mortgage lender
You should talk to your lender as soon as possible. Many banks have special teams who work with people who are having difficulties with their mortgage payments.
Lenders are generally willing to discuss options and proposals, even if you are already behind with your payments, and will usually try help you find a solution.
Your lender has to take specific steps before taking you to court. Make sure that you keep records of all communication you have with your lender and keep copies of all the letters you send and receive.
Don’t be put off because you think your case is hopeless. There is often a solution, no matter how complicated the situation may seem. If you haven’t decided what you are going to do about the problem, explain to your lender that you are going to get specialist advice about your options. This may give you more time to get to grips with your debts.
Ways to pay your arrears
Your lender will discuss the different ways you can repay your mortgage arrears. If you’ve got any money left over each month after paying essential bills, you could suggest adding a little bit on top of your future monthly payments.
If your home is worth more than the mortgage, your lender might let you add your arrears to the total amount you owe and pay it back over the lifetime of the mortgage. This is known as ‘capitalising your arrears’.
You might also be able to pay off your arrears using your pension or an endowment policy – which is a type of life assurance.
There’s a chance you could end up paying lots of interest or even get into more debt with these options, so it’s worth talking to an adviser at your Citizens Advice first.
If you’re struggling to pay your mortgage every month, you could ask to:
- pay the debt over a longer period
- switch to interest-only payments
- take a break from your payments for a few months – this is known as taking a ‘repayment holiday’
If you get benefits, it’s also worth checking if you’re eligible for a Support for Mortgage Interest loan.
If you cannot come to an agreement
Your lender might ask a court for a ‘possession order’. This lets them sell your home and use the money from the sale to recover the money you owe.
Your lender has to give you at least two weeks notice in writing before they apply to the court.
If you have a court order, or a letter stating you are being taken to court, get advice quickly. The Citizens Advice website offers lots of useful information and guidance if you are taken to court for mortgage arrears and can offer specialised advice at your local Citizens Advice Somerset office.
Working with the council
If you need more advice and help, contact us as soon as you know you are at risk of losing your accommodation, for example when you have missed rent or mortgage payments or you receive letters from your landlord or mortgage provider. Do not wait until you have nowhere to stay. You can work with us to help you find a solution. If you want to work with us, the first step is for you to provide us with some information about you and your situation.
It is much better for us to try and prevent you becoming homeless in the first place or to help to you look for a planned move.
If you need to leave urgently or in the next few days, see the information on Emergency and temporary accommodation.