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If you’re faced with financial difficulties due to unemployment, accident or sickness then it can be incredibly hard to keep up with mortgage repayments putting you at risk of losing your home. If you have taken out mortgage payment protection insurance or income protection insurance then you can put in a claim to help keep up with your monthly payments for a set period of time, usually up to 2 years. However if you do not have any insurance in place to protect you, you could be faced with repossession. Unemployment is the most common factor causing difficulties but another problem people face is when their property falls into a state of disrepair causing them problems raising the money for urgent repairs whilst maintaining mortgage payments, which often causes further financial difficulty. There are however, many ways you can avoid repossession or at least prevent the negative consequences of repossession by choosing to sell your home quickly.
First and foremost, it is important to speak to your lender and make them aware of your situation. Whether you lose your job or are in financial difficulty, your mortgage provider will be able to advise you and help you come up with a payment plan or in some cases a payment break to allow you to get back on your feet, but this is usually dependent upon the terms of your mortgage. There are also ways you can try and make your mortgage more affordable, or removing unnecessary bills in order to free up some cash. You could consider changing to an interest only mortgage which will reduce your monthly payments significantly but you will need to invest money elsewhere to cover your capital at the end of your mortgage term. You can also revert back to a standard mortgage after a short time if you are concerned about having a large debt at the end of your mortgage. If you cannot raise the money, you will be forced to sell your home in order to raise the cash, leaving you with very little.
There are also options to extend the length of your mortgage, although you will end up paying more in the long run due to increased interest it can help you by reducing monthly outgoings. Many people also opt to remortgage in order to reduce your monthly payments and sometimes this can help pay off any urgent structural repairs so could be a good option if you are in financial difficulty and have many debts outstanding. You may also be able to find a better deal elsewhere, so it is always a good idea to shop around if you are considering it.
Essentially repossession is something the lender also wants to avoid, so they will try and come to a suitable arrangement as soon as possible. This could include changing the term of your mortgage or even spread the outstanding amount over the remainder of the mortgage but you will need to pay additional interest with this option.
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