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Mortgage Arrears

Many people experience financial difficulties at some stage during the term of the mortgage. In most cases, these difficulties can arise through no fault of their own, for example:
  • Illness

  • Redundancy
  • Unemployment
  • Matrimonial problems

Mortgage problems are often made worse by the existence of other debts, especially if you are under pressure to pay other creditors at the expense of the mortgage.

If you have other debts which you cannot repay, want help to prioritise your debts, or need assistance to write to other creditors, get advice from the StepChange Debt Charity or the Citizens Advice Bureau.

Act Now to avoid the situation becoming worse

If you are in mortgage arrears:

If you are in arrears with your mortgage you should contact your lender immediately to discuss your account. You should also seek independent advice as soon as you can.

It is never too late to get advice.

You should always:

  • Pay as much as you can, even if you cannot pay the full amount.
  • Speak to your lender as soon as you have a problem and decide with them the best course of action.
  • Check which benefits you may be entitled to, not only with regard to the mortgage, but other benefits which may increase your income. You can check directly with the Benefits Agency .
  • Consider ways of increasing your income, for example, taking in a lodger.
  • Work out your personal budget to show your exact financial position
  • You may need to get some debt counselling advice.
  • A financial statement is a useful way of checking your financial situation, these are available from Housing and Community services.

 You should never:

  Stop paying your mortgage. The debt will not go away.

  • Ignore the problem. The longer you leave it, the worse it gets. Do not delay getting advice.
  • Give up hope. The majority of borrowers in arrears do not end up being repossessed.
  • Sell your home without seeking advice. Especially, if you are considering applying to the council for help.
  • Abandon your home or hand in your keys to your lender. This will not end the problem. You will still be responsible for the mortgage payments, the costs of selling your home and interest on the loan. Your debt to the lender may increase after the property has been repossessed.

Contacting your lender(s)

If you have several loans secured on your property, you should contact all your lenders. (They might be referred to as a second mortgage, secured loan or consolidated loans). Each will have a legal charge on the property (this is a debt owed against the property) but will be ranked in order of priority. Each lender will have some rights regarding the enforcement of the security.

You should write or telephone your lender and ask to make an appointment to discuss your situation at the local branch.

Topics to discuss with your lender

  • The reasons for your financial difficulties, whether long or short term.
  • Your income and outgoings. Take along your completed financial statement.
  • The reasons for your financial difficulties, whether long or short term.
  • Your income and outgoings. Take along your financial statement.

 The options open to you:-

 Reduced payments for an agreed period

  • Extending the length of the mortgage
  • Switching from an endowment to repayment mortgage or other type of mortgage
  • Paying off your arrears over an agreed period
  • Details of any mortgage rescue schemes/mortgage protection plans

It is important that you do not agree to make higher payments than you can afford. The lender would rather see regular agreed payments, than irregular lump sum payments. However, if you can pay more than agreed, do so.

You should keep copies of all letters that you send to your lenders, as well as notes of what was said in telephone conversations and at meetings. Always make a note of who you spoke to and when, as well as keeping all correspondence sent to you by the lenders.

Mortgage arrears loans

In certain circumstances, we can consider a one off lump payment to help clear some arrears from your loan and put a repayment plan in place for the remainder. This could help ease the pressure on you and your family. You will need to agree to a referral to Poole CAB to look at putting together a viable plan as part of the payment offer but it could offer a bit of breathing space. 

You can discuss this option with our Housing Advice Staff and see whether it is right for you.

Legal action to repossess

If you default on your mortgage agreement, your lender may start possession proceedings to repossess your home.

In practice, most claims are brought in the County Court and proceedings will start in the Court for the area in which the property is located.

The procedure is generally as follows:

  • The lender will write to you to advise of the commencement of court proceedings.

  • The lender will issue proceedings in the County Court and file the particulars of claim for possession.
  • You will receive a summons telling you that a date has been fixed for a Court Hearing. You should also receive the Court documents referred to as "particulars of claim for possession" and "defence form". Get advice if you do not understand the forms. If you do not receive the summons until just before the hearing, you should still go to the Court and request an adjournment. The Judge may not agree and the case may still go ahead.
  • At the Court Hearing the possession action will be heard by the District Judge or Registrar in Chambers, unless the Court directs otherwise. You may wish to take along a representative at the Hearing, but it is important you do attend the Hearing. You will be given the opportunity to tell the Judge about your financial circumstances and your plans to pay off the arrears.
  • If the Court is satisfied with your plans to pay off the arrears, it has the power to make a Suspended Possession Order. This means that as long as you keep to the repayment terms agreed in Court, your lender cannot apply to Court for a possession warrant. You must therefore make sure your offer is realistic.
  • If the Court is satisfied that you cannot keep up your mortgage payments, it may make an Outright Order for Possession. This Order gives the lender possession of your home after a certain date (usually 28 days after the order is made unless a longer time is agreed at the Court). The lender can then apply to the Court for a possession warrant on or after the date of the Order.
  • Possession Warrants or Bailiffs (link) Notices will give you a date when you will be evicted from your home. The bailiff will notify you in writing of the date of the eviction which may be anything from a few days to a couple of weeks. The bailiff may visit you before the eviction date. You may be able to set aside the bailiffs warrant. You should seek advice immediately if you receive a bailiff’s warrant, as it may not still be too late to save your home.

 
What is the pre-action protocol?

The pre-action protocol sets out what you and your lender should do before your lender takes action to repossess your home. It applies to most residential mortgages. At a court hearing you and your lender will need to be able to prove that you have followed the protocol.

Further information can be found at

http://www.direct.gov.uk/en/index.htm

Support for Mortgage Interest
  • Are you out of work and claiming benefits?

  • Is your property worth £200,000 or below?

If you are out of work and claiming benefits, the government can assist with support towards your mortgage interest payments. The waiting time to receive help was reduced in January 2009 from 39 weeks to only 13 weeks, making it far easier for homeowners to access support quickly. The capital limit on which eligibility for assistance is calculated was also doubled to £200,000. From the 1st of October 2010, the interest rate used to calculate SMI has been set at the Bank of England's average mortgage rate - currently 3.63 per cent

Access to this support comes as part of your claim for state benefits; so speak to the Department for Work & Pensions about claiming.

https://www.gov.uk/contact-jobcentre-plus

For information on all the help available for homeowners, please contact our housing advice team on 01202 633804 

Useful Contacts

Government website:
https://www.gov.uk/mortgage-rescue-scheme

Citizens Advice Bureau
54 Lagland Street
Poole
01202 670716   
www.poolecab.co.uk
www.citizensadvice.org.uk

Shelter
30 Poole Hill
Bournemouth
0808 800 0380
bournemouth@shelter.org.uk
www.shelter.org.uk

StepChange Debt Charity
Wade House
Merrion Centre
Leeds
LS2 8NG
0800 138 1111
www.stepchange.org

 

Contact us

Email
housingadvice@poole.gov.uk

Telephone
01202 633804

Text Relay
18001 01202 633805

Address
Housing and Community Services
Civic Centre
Poole
BH15 2RU

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