Selling your home as a last resort.

If you’re finding yourself in mortgage arrears, selling your home can feel like a daunting last resort. However, there are many reasons why it might become a necessary consideration and it might help to understand when and why selling might be the right step for you.

First, let’s acknowledge the emotional and financial stress that mortgage arrears can bring. Missing mortgage payments often leads to additional fees, higher interest rates and a significant drop in your credit score, which can impact your ability to secure future loans or credit. These financial pressures can quickly escalate, making it increasingly difficult to catch up.

Economic hardships, such as job loss, medical emergencies or unexpected expenses, are common reasons homeowners fall behind on their mortgage payment. When you’re unable to cover your mortgage, the fear of repossession becomes real. Repossession not only means losing your home but also enduring the lengthy and stressful legal process that can further damage your credit and financial standing.

Before deciding to sell, it’s really important to explore other options. Contacting your lender should be your first step as most lenders prefer to work with you to find a solution rather than proceed with repossession. They might offer solutions like loan modification or a repayment plan to help you manage the arrears and stay in your home.

Seeking professional financial advice is also essential. Debt counsellors can help you assess your situation, create a budget and negotiate with your lender. They can also advise on whether options like refinancing or government assistance programs are available to you.

If these efforts don’t provide relief, selling your home might be the next best step to avoid repossession. By selling, you can settle your mortgage debt and possibly retain some equity, which would be lost in a repossession. This option might allow you to start afresh without the severe credit damage that repossession would entail.

In some cases, a short sale might be an option. This involves selling your home for less than the remaining mortgage balance, with the lender’s approval. While this will negatively impact your credit score, it is generally less damaging than repossession.

Ultimately, deciding to sell your home is a deeply personal and challenging decision. However, it’s important to remember that taking proactive steps, seeking advice and communicating with your lender can provide pathways to manage your mortgage arrears effectively. Selling your home can be a strategic move to regain financial stability and avoid the more severe consequences of repossession.

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