Many people contact Debt Support Trust because they can’t pay their mortgage. This debt worry can cause people to ignore the problem and pretend it doesn’t exist. When they eventually deal with the problem, the mortgage arrears have escalated or possibly repossession proceedings have begun.
There are plenty of reasons why somebody may be unable to repay their mortgage. The mortgage is a secured debt, meaning that failure to repay the money on time could result in the property being repossessed. If you would like help with your mortgage debt, please telephone our debt advice charity line on 0800 085 0226.
Reasons for Failing to Pay Mortgage
A mortgage is an important payment to make every month, it ensures you can remain in your property and repay the loan you borrowed. Rarely do people fail to pay their mortgage on purpose, usually it’s because they are struggling financially.
Some of the most common reasons for failing to make the contractual mortgage payments include:
Unemployment: A sudden spell of unemployment can mean that repaying the monthly mortgage payment is difficult. This is usually a short term problem but there is help and advice available so get in touch.
Overstretched financially: An over reliance on credit is the main reason for people being unable to repay their mortgage. Multiple credit cards, loans and overdrafts, coupled with the cost of the mortgage is just too expensive. There is support just calling 0800 085 0226 and speaking to a friendly advisor.
Please note that with priority expenditure, like a mortgage or council tax, this must be paid before credit cards and other unsecured debts. Our charity debt advice team can help you with your unsecured creditors so that you can afford to repay your priority debts.
Divorce/ Separation: When people separate or divorce the couple income remains the same, however the expenditure increases because people live in separate properties. This can mean the mortgage is unaffordable.
Increase in repayments: If the repayment amount each month is based on the interest rate, then a once affordable mortgage could become impossible to manage, because the interest rate has increased.
Advice on Mortgage Debts
By ignoring mortgage debt you will only make the situation worse. The sooner you realise a problem exists, it’s important to speak to you mortgage company and explain the financial problems you face. The direct approach is always best. Your mortgage company can then help you with a payment holiday or move your mortgage to interest only for a short period. This can be expensive with fees and charges being included.
The Government’s Mortgage Interest Scheme can help pay the interest on your mortgage for a short term period too. This usually lasts for a maximum of two years.
Debt Problems with Mortgage
When debt becomes a problem on secured credit agreements, like a mortgage, because of an over reliance on credit, then starting with a budget is best.
Write down all your income, like employment income, tax credits, pensions etc and then consider your expenditure. What do you spend on your mortgage, council tax, food, gas, electricity, insurances, telephones, car, transport, clothes, medical / dental or pets each month?
Next, consider how much money you are paying each month towards your unsecured debts, like credit cards, overdrafts, personal loans, store cards etc. If you’re unable to pay your mortgage because you’re paying unsecured credit, then you’ll need to address this.
Your expenditure to live (including mortgage and council tax) should be paid first, before paying the credit cards. The reason may people give for paying the credit cards over their mortgage is because the credit card companies will call, write and text straight away, whereas the mortgage company will generally be more flexible. Unfortunately the mortgage company has a security over the property and as such they can repossess if you don’t keep up to date with your repayments.
Get Advice on your Mortgage Debt
If you’re unsure how to manage your unsecured debts and mortgage repayments, seek professional debt advice from a charity. A charity will consider your income, expenditure and debt repayments. You can then expect honest advice on how best to rectify your financial problems.
Debt Support Trust advisors are available to help by telephoning 0800 085 0226 or via email on contact@debtsupporttrust.org.uk.