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Mortgage Arrears and Missed Payments

Most homeowners make mortgage repayments one of their highest financial priorities, because failing to meet them can eventually lead to repossession of your home. If a borrower doesn't make their monthly repayments, they will fall into what is known as mortgage arrears. Mortgage arrears will also  damage your credit rating which can affect  future borrowing.

Mortgage arrears can occur as a result of reasons outside of a borrower's control. In certain circumstances, such as becoming unemployed, mortgage payment protection insurance will cover your repayments, for this reason it can be worth taking out when you get your mortgage.

If payments are missed, you may find that penalty fees are charged, which can add to the problem. As with any financial difficulty, communication is key; don't just stick your head in the sand, contact your lender if it looks as though you are going to have a problem. It is in a lender's interest to help borrowers out of repayment difficulty and they also have a code of conduct which they are obliged to follow, meaning they should consider your case and treat you fairly.

If you have fallen into arrears, your lender may ask for a detailed statement of income, outgoings and debts so they can assess your case and arrange a mortgage repayment proposal. They could suggest one of the following to help ease the burden:

  • Lowering repayment levels for a certain period of time
  • Switching your mortgage to interest only
  • Providing a ‘payment holiday’
  • Increasing mortgage term to spread out repayments over a longer period.

For those in mortgage arrears, free and independent advice is available from Citizens Advice, the National Debtline, and the Consumer Credit Counselling Service (CCCS).

Lender Initial Rate Duration Standard Rate Overall Cost For Comparison Max Loan To Value Fee
2.59% 2 years 5.69% 5.4% APR 75% £999
2.69% 2 years 4.99% 4.9% APR 75% £495
2.94% 2 Years 5.69% 5.4% APR 75% £199
2.99% 2 years 4.99% 4.9% APR 85% £495
2.99% 3 years 4.99% 4.6% APR 70% £499
3.0% 2 years 5.69% 5.5% APR 80% £999
3.19% 5 Years 4.79% 4.2% APR 80% £995
3.35% To Jul 2014 4.95% 4.6% APR 75% £999
3.5% 2 years 5.49% 5.1% APR 75% £595
3.84% 2 years 3.94% 4% APR 90% £499

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