Raising Money to Pay Arrears

1 - If you have a mortgage protection plan with an insurance company then you may receive help with your mortgage payments if you fall ill, become unemployed etc. You should also check such policies before allowing your mortgage payments to fall into arrears.

Many building societies have now abolished mortgage protection plans as a condition to taking out a mortgage.

2 - You may also be entitled to help from the DSS with payment of the mortgage interest if you are out of work or on a low income.

You should check with the DSS to find out if you are entitled to extra help in paying your mortgage. The benefits agency normally pay in the case of loans taken out before 2nd October 1995. They will normally pay the interest on loans for the purchase, repair or improvement of the home. They will not however pay the capital element of the monthly loan repayment or the premiums for any endowment or life policies.

However the benefits agency will pay nothing for the first 8 weeks and then 50% of the mortgage interest for the next 18 weeks, followed by the full housing costs after 26 weeks.

For loans taken out after the 1st October 1995 nothing is paid for the first 39 weeks, but then the full housing costs are paid after 39 weeks, or in the case of a single parent or carer the full housing costs are paid after 26 weeks.

3 - Rescheduling your loan by spreading it over a greater number of years may also help if you have problems meeting the instalment payments. This will increase the total debt repayable.

Most lenders will charge a fee for rescheduling a loan, but often this is added to the total amount to be repaid at the end of the term.

This may involve extending the term of the mortgage or changing from a variable rate to a fixed, capped or discounted rate.

4 - If you have a repayment mortgage it is worth asking your lender if they will accept an interest only payment until your financial situation improves. This will also increase the total debt repayable.

5 - If there is a lender who is offering a much lower interest rate than your own lender then it may be worth considering a remortgage. Lenders will not usually do this if there is a "negative equity".

A remortgage involves paying off the existing loan by taking out another loan to do this. The second loan will be secured on the property and the first loan taken off.

However, be wary of any hidden charges including charges for paying off your mortgage early.

6 - As a final option if all else fails and you are unable to stop your lender repossessing your property you might still be able to convince them to allow you to remain in the property as a tenant paying rent so that you do not lose your home altogether.

This may be possible if the property has a negative equity and will not fetch much money on a sale.

This information is intended to help with raising money to pay arrears, for more advice on this then please call an us on the number below.