Both Husband and wife or both partners have jobs. You decide to buy your own house. There is enough money coming in every month to pay for the Mortgage and other nicer things in life. Everything is going well. After a few years, some of the mortgage has been paid off. House prices have gone up. Now you have lesser outstanding mortgage than original. Interest rates are down so the mortgage payments are even easier. House next door has just sold for far more than what you had paid for your house some years ago. So you have equity in your property now. However, as the old saying goes, there are only three things for certain in life – death, taxes and change. Family now has two children, a dog and loan for a people carrier or a conservatory or some thing else. Mum stays at home to bring up the kids or works part time. Single full income -household finances start to get squeezed. Dad is feeling the stress. He becomes ill or loses his job. But he can't afford to be out of work for long, so he takes a job that does not pay as well but will do for the short term till he finds a better job. With reduced income, everything gets squeezed a little more. Stress increases in the household. Mortgage payment is priority. Since there is not much money leftover, essential items are put on credit card because balance does not need to be paid for a couple of months. Although you do not like borrowing on credit cards, which incidentally are the one of the worst types of borrowing, but there is not much choice. Debts start to rise. You pay back you minimum or just about enough to your credit card company. The kids need more clothes, school shoes, etc. They are bought on credit card as well. When a credit card reaches its maximum, additional cards are easily available. You transfer the balance to new card to save on the high interest costs of the previous card. As the credit card bills as well as bills for gas, electricity, car tax, council tax, TV license etc drop through the letter box every month, misery starts to rise. You are concerned but it has not got to any serious level yet because you are confident that you will find a better paying job sooner or later. And then there is equity in the house. The adverts on the TV talk about consolidating debt. This will enable you to pay off your bills, do up the kitchen, buy a new car and take a little extra to take family on holiday. A new ‘low interest’ loan can be secured against the equity in your property to pay off your high interest credit card bills and other debts. Sooner or later, the extra cash finds its way out of your pocket till there is none left. Loans, credit cards, mortgage still need to be paid ...... more depression!
Mortgage
What if we miss paying the mortgage for one month? It’s only one payment and that will et us back on track. May be! Hat was easy. How about taking kids on holiday by skipping another mortgage payment? Bank or the building society wouldn’t mind, will it? It is a big loan after all and we have been with them for so many years. And they will just make more money if we take longer to pay back. But now-a-days, LENDERS DO MIND!
Arrears
If you are more than one month late with your mortgage payment, most Lenders will send you a letter, stating that you are in arrears with your mortgage. They will want to know how you will repay the debt. You need to call them to explain your circumstances. They may even ask you to follow up this call with a letter for confirmation. However yours Lender can start legal proceedings to repossess your house if:
a. You do not contact your Lender,
b. Lender doesn't agree with your repayment schedule, or
c. You can not afford to pay them back
Many Lenders start these proceedings after 2 missed payments
You get a letter from Lenders' solicitor. This letter will advise you that the
Solicitor will start court proceedings if you don't pay off the arrears within 7 days, or if you have not responded with an adequate proposal for paying off the arrears.
If you get this letter, you know that things have gone a bit far. You must get
in touch with the Lender or their representative as soon as possible. This is because your Lender is not joking, they are serious.
Mortgage
What if we miss paying the mortgage for one month? It’s only one payment and that will et us back on track. May be! Hat was easy. How about taking kids on holiday by skipping another mortgage payment? Bank or the building society wouldn’t mind, will it? It is a big loan after all and we have been with them for so many years. And they will just make more money if we take longer to pay back. But now-a-days, LENDERS DO MIND!
Arrears
If you are more than one month late with your mortgage payment, most Lenders will send you a letter, stating that you are in arrears with your mortgage. They will want to know how you will repay the debt. You need to call them to explain your circumstances. They may even ask you to follow up this call with a letter for confirmation. However yours Lender can start legal proceedings to repossess your house if:
a. You do not contact your Lender,
b. Lender doesn't agree with your repayment schedule, or
c. You can not afford to pay them back
Many Lenders start these proceedings after 2 missed payments
You get a letter from Lenders' solicitor. This letter will advise you that the
Solicitor will start court proceedings if you don't pay off the arrears within 7 days, or if you have not responded with an adequate proposal for paying off the arrears.
If you get this letter, you know that things have gone a bit far. You must get
in touch with the Lender or their representative as soon as possible. This is because your Lender is not joking, they are serious.