What does support mean in finance?
Contrary to belief, if you are facing repossession of your home due to mortgage arrears, lenders do offer support to help you get through the unpleasant situation. If you are in this situation, it’s crucial to understand the options available.
One of the first steps lenders will take with you is to have an open and honest conversation about the financial difficulties you’re experiencing. This dialogue aims to understand your specific situation and to explore possible solutions. Lenders may offer a temporary payment arrangement, allowing you to pay a reduced amount for a short period until you get back on your feet. This can provide some breathing room and help you manage your finances better without the immediate threat of losing your home.
Another common form of support is extending the mortgage term. By lengthening the period over which you repay your mortgage, your monthly payments can become more manageable. This can be a significant relief if you’re struggling to meet the original monthly amounts. Similarly, switching to an interest-only mortgage for a temporary period might be an option. This means you’ll only pay the interest on your loan for a set time, which can lower your payments substantially while you work on improving your financial situation.
Lenders may also assist you in restructuring your debt through a process known as capitalising the arrears. This involves adding the missed payments to your total mortgage balance and then spreading this over the remaining term of the mortgage. While this increases the overall amount you owe, it can prevent the immediate pressure of catching up on missed payments.
For those who might benefit from more personalised advice, some lenders provide access to financial counselling services. These services can help you create a budget, prioritise expenses and find other ways to manage your money more effectively. Engaging with these resources early on can make a significant difference in finding a sustainable path forward.
In cases where these measures are not enough, selling the property might be the most viable option to avoid repossession. Lenders can offer support through this process, sometimes suggesting ways to sell quickly or providing information about how to maximise the sale price to settle as much of the mortgage debt as possible.
It’s also worth noting that lenders are required to follow certain protocols before proceeding with repossession. They must demonstrate that they’ve taken reasonable steps to help you manage your mortgage arrears. This includes providing clear information, offering alternative payment options, and giving you time to seek independent advice.
Knowing that lenders have various support options can provide some reassurance. By engaging with your lender early, discussing your situation openly and exploring all available avenues, you can find a way to manage the crisis and work towards a more stable financial future.
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