Falling into arrears on your mortgage can lead to serious consequences, including your home being repossessed. It can also have a negative impact to your credit file.
Mortgage firms and lenders have a specific procedure they have to follow when you miss your payments. The culmination of this procedure is repossession, but usually, this is very much a last resort.
Before they can start court proceedings against you, your mortgage lender has to follow certain rules set out by the Financial Conduct Authority (FCA). They must:
▪️Treat you fairly
▪️Properly consider any request from you to change the way you pay
▪️Allow you a chance to pay off your arrears if you offer
▪️Only start action against you as a last resort and only if their other efforts to recover the money have failed
As well as this, they also have to follow the ‘pre-action protocol’. This is a set of rules laid out by the courts that describe how they expect the lender to pursue legal action.
If your lender hasn’t followed this protocol correctly, it may be possible to prevent a possession order being issued.
Will mortgage companies let you skip a payment?
If you don’t have any form of payment protection in place and need to take a break from paying your mortgage, you are allowed to ask your mortgage lender for a payment break.
You will probably need to confirm with them that your personal circumstances have changed or provide them with a specific reason for why you need the payment break. This could be because of a change of income, redundancy, or something else.
At the end of a mortgage payment break, you will have to pay back the money you’ve missed, but usually your bank will offer you an affordable way to do this.
Most commonly, your mortgage will extend by the number of months you took a break for or the additional amount you’ve missed will be added to your monthly payments.
How long do mortgage arrears stay on your credit file?
Even if you were just behind with one mortgage payment, this will be noted on your credit file for six years. Arrears or very late payments may be explained on your file with more information about how many months it took you to make up for the payments.
As a general rule, the more recent the arrears, the bigger the impact on your credit file they will have.
Can you get a mortgage with arrears?
If you have arrears on your current mortgage and you want to apply for a new mortgage, those arrears will be a big hindrance to potential lenders. You may find it very difficult to find a lender to accept your proposal.
Any negative impact on your credit file will make it difficult to apply for a mortgage, especially if the arrears are recent.
If you’re struggling with debts and keeping up with payments, get in contact with us. Our expert money advisors will listen to your personal financial situation and can let you know of all of the debt solution plans available to you. All of our advice is free of charge, impartial, and confidential.