With rising interest rates, more people are getting into mortgage arrears recently; while the number of repossessions is tipped to rise next year. Here are ten steps to help borrowers stop mortgage arrears from building up and risking repossession.
1. Deal with the problem
Don’t ignore problems, as they will inevitably worsen, if things are tight, you need so sit down and tackle the issue before it gets out of hand.
2. Review your interest rate
It may be possible to make your mortgage payments more manageable by looking for a better deal on this check if your current lender can improve your rate before shopping around.
3. Review your other debts
Take a look at any other financial commitments you have to see if there is a way to save money. It may be possible to cut your phone bill or other regular payments.
4. Budget carefully
List your monthly income and expenditure by knowing exactly where your money is going you may be able to identify savings you can make.
If you have any savings in the bank, then it would be wise to use some of this money to reduce your debt to ease the pressure.
6. Choose a fixed rate mortgage
If you are worried that you will struggle to keep up with repayments if interest rates continue to rise, then changing to a fixed rate deal will allow you to budget in advance.
7. Change the way you repay your mortgage
You may still be able to reduce your monthly payments by extending the term of your loan or switch part of it to interest only, though this should be considered a last resort, as it may mean paying more interest in the long run.
8. Don’t borrow too much
Before taking out a mortgage; think carefully about how much you can afford to pay back.
9. Talk to your lender
If you are open about your difficulties and inform the lender before missing too many payments, then you may be able to find a solution.
10. Consider a quick house sale
If the situation is such that you cannot keep to any repayment deal, and you are threatened with repossession, then selling the property may be a better solution to stop mortgage arrears from building up and prevent a repossession.
With this solution, you may raise enough to cover your debts, and stay in your own home with a sell and rent back solution.