What you need to know about mortgage repossession

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It’s common knowledge that failing to pay your mortgage could cost you your house. If you don’t pay your mortgage, the lender’s last resort is home repossession. Whether you’re in the midst of looming mortgage repossession or not, you need to understand what causes it so that you’ll be better equipped to handle it when it comes, or at least find solutions to avoid it.

Problems that can lead to mortgage repossession

Major life changes are often the root cause why home owners struggle to keep up with mortgage payments. The most common reason out of all existing ones is the loss of a job or business. If you lose your primary source of income and you do not have another source of income to fall back on, your monthly budget is abruptly reduced. Your mortgage that was once a manageable monthly payment becomes unaffordable all of a sudden.

Other causes of lapses in mortgage due payments are divorce and bereavement. After a divorce or relationship breakdown, one is left with the upkeep of the property once shared with a spouse or partner. If this person’s income or savings isn’t enough to maintain the house and pay the mortgage dues, he may be looking at a home repossession notice soon.

The end of a cheap mortgage deal can also trigger inability to pay mortgage dues. Borrowers that find themselves in this situation have to pay an increase of as much as 2% of their old rate to the mortgage company. Rising mortgage costs can be unaffordable for some home-owners.

How to deal with your mortgage lender

•  Be clear, honest, and straightforward. If you find that you cannot afford to keep paying your mortgage dues for whatever reason, inform your mortgage lender as soon as possible. It’s recommended that you talk about your current financial standing with your mortgage lender and propose a payment plan. An efficient mortgage lender is one who can help you with your mortgage issues by recommending options that can remedy your situation.

•  Remember that it is also in your lender’s interest to resolve mortgage problems via negotiation and collaboration with you. Mortgage repossession is only their last resort if all other potential options have been explored and you still cannot pay your mortgage dues.

• Read your mortgage lender’s letters and notices. You’re working against the clock to stop home repossession. Every minute working on this and every correspondence with your mortgage lender counts. Keep the situation under control and always know which step you are in the process by not missing letters, enquiries, and notices from your mortgage lender.

•  Get free debt advice. Consider consulting debt advisers from groups that provide their services for free like the National Debt line, Citizens Advice, or Shelter England. Debt advisers could help you deal with your mortgage lender or even communicate with your lender on your behalf. Debt advisers also help you draft realistic payment plans or repayment offers that fit well into your situation.

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