Archive for Mortgages Category
For some people in debt selling their home is an option to raise the funds to pay off their creditors. If you are a home owner with equity in your property this could be an option for you.
If this is a route you think would be suitable for you read our top tips for what to do:.
- Get together all of your creditor balances and confirm how much you owe to each of them.
- Contact your mortgage lender and get up-to-date balances on your outstanding amount. Then you are in a position to instruct a surveyor to determine the value of your home. From this you can see how much equity you have.
- Do not forget to calculate the fees that are involved in selling a house.
- If, once your house has sold, you have enough funds to clear your debts in full you can arrange payments with them.
- If your funds do not cover all of the debt then you can contact Payplan and we can look into offering your creditors a reduced settlement or a Full and Final IVA.
- Remember to calculate the costs of moving into your new accommodation. If you are moving to a rented property you will need to have funds available to offer as a deposit.
Selling your home in order to repay your debts will prevent creditors from forcing the sale of the property or them going down the bankruptcy route , however you should always consider all options before making any major decisions like this and seek appropriate advice.
I think that it is safe to say that one of the biggest worries for clients coming to Payplan is the risk of losing their house. If you have a mortgage and you fall into arrears with your payments you risk losing your home and having it repossessed.
I want to talk today about how to avoid the risk of repossession and what to do if you are already at risk.
How do I avoid the worry of repossession?
It may seem simple, but the easiest way to avoid the worry is to keep up with your mortgage payments. Above all else you need a roof over your head. Credit card and loan companies can sometimes get demanding so it may seem ‘easier’ to pay the credit card than the mortgage because you feel you’re getting less hassle in the long run.
If you know you are going to miss a mortgage payment or have already missed a mortgage payment then it is generally accepted that the relationship between yourselves and your lender is best served by you making early contact with your mortgage company, to explain your situation
I have already fallen behind with my mortgage and they are now seeking repossession, what do I do?
If you have already fallen behind with your mortgage payments and it is too late to do anything, then your mortgage company may then seek to repossess your home. The first step towards repossession is that you will receive notification through the post. You will be sent a claim form, which you have 14 days to respond to and this gives you the chance to explain your circumstances and try and resolve the situation.
If this is unsuccessful, the Lender will apply, through the County Court, for a Repossession Order. You will receive a summons to attend a County Court hearing, and whilst this may appear daunting to you, it will always be in your best interest to attend, and it gives you the opportunity to put your case forward yet again, this time to a judge directly. The County Court Judge will try to be helpful to you, and do everything possible to ensure that you have every opportunity to plead your case. The Judge will make an immediate decision.
If the Lender’s application for the Possession Order is successful, you will have at least 28 days to either to vacate the property, or to appeal the outcome. If the latter is unsuccessful, the lender may then exercise its legal powers to evict you from your home, and to take steps to sell your property, the proceeds of sale being used to repay the mortgage debt and the Lender’s costs.
Being in debt is scary enough, but when you have a property there can be added pressure on you. Today I want to talk about mortgages, and debt and how they come together.
Your mortgage will most probably be the biggest debt you will ever have. You will have your repayments set out for you at the beginning and you will know what interest you will pay towards this. Depending on the type of mortgage, your interest will either be fixed at a set rate for a certain length of time or will be variable but linked more or less to Bank base rates.
As well as being the biggest debt, it will often also involve the largest single, regular outgoing in your household budget and should always be paid as there are serious consequences.
Getting Your Priorities Right
In order to manage your debt you need to start by prioritising what needs to be paid. If you have a mortgage then your monthly payment will always the first thing that you need to pay. After that you need to pay any secured loans or hire purchase agreements. Any other debts will then come after.
I know that this might seem like I am stating the obvious but from my past experience when it comes to paying your debts it is usually “whoever shouts the loudest” gets your money. For example, if you have a credit card or a loan and you miss a payment they will always contact you straight away and demand money from you. They will also add interest and charges on straight away for missing a payment of sending a late payment. Whereas, if you miss a mortgage payment it can take them a couple of months to process the missed payment and to take the necessary action.
By doing this you may avoid the initial hassle of not missing a credit card payment but by missing a mortgage payment you face more serious consequences. You may think that you can make up the missed mortgage payment, but in reality it is often harder to catch up once you are in arrears with payments than you might at first think, this is because you will not only have your usual monthly expenditure to pay, including your usual mortgage payments, you will also have your creditor payments that you need to keep making as well as extra to your mortgage to cover the arrears
What Do I Do If I Am In Arrears?
If you are in arrears with your mortgage then the best thing for you to do is contact your mortgage company straight away and reach an early, workable agreement with your lender. If you have fallen into arrears because you are struggling with your debts then seek free impartial advice to help with setting up a plan with your creditors.
If you are still unsure about anything call one of our specialists who will always be happy to help
Don’t forget you can also follow me on Facebook and Twitter.
New FSA proposals for mortgage borrowers
The FSA wants to ensure that mortgage customers are protected and that lenders only lend to those who can afford mortgage payments.
- Introducing affordability tests
- Verification of borrowers’ income
- Extra protection for susceptible customers
The proposals are a direct result of a review undertaken by the FSA, which looked into causes of mortgages in arrears and repossessions since 2005.
Conclusions from the review:
- Nearly half of all households either had no money left or had a shortfall, after mortgage payments and living costs were deducted from their income
- Almost 50% of new mortgage customers were not asked to verify their income between 2007 and 2010
- Interest-only mortgages have been increasing, at the topmost, 30% of all mortgages were interest-only
- Many borrowers depend on future house price rises and unsure life events to repay their mortgage
- Customers with credit-impaired history are the most vulnerable
The FSA director responsible for the mortgage market, Lesley Titcomb, said:
There is a clear link between financial overstretch and mortgage arrears and repossessions, and we are determined to protect vulnerable consumers by making sure that everyone who takes on a mortgage can afford to pay it back.
If you are struggling to manage your monthly outgoings then contact Payplan for free debt advice online or simply call 0800 254 5205.