Although a primary concern amongst individuals in debt is the threat of losing their home, the truth is that the vast majority of people who find themselves in arrears with mortgage payments don’t. In fact, a staggering 97% of homeowners who’ve fallen behind with their mortgage payments over the last two years, during the recent period of recession and credit crunch, actually managed to hold onto their homes and get themselves out of debt.
The figures released by the Building Societies Association (BSA) stated that a third of those people who had found themselves in mortgage difficulty had arranged terms and successfully completed the repayment of their arrears in full, while a further 41% had come to an agreement with their lender, settled on a repayment plan and were currently working towards this goal. An additional 12% of borrowers had met with their bank or building society, come up with a repayment schedule to suit both parties but hadn’t yet commenced repayments. This left only 3% whose home was actually repossessed.
The clear piece of advice to arise from these findings is to maintain an open line of communication with your lender. 46% of the people who contacted their lender promptly, before they actually found themselves in financial difficulty, managed to arrange terms to suit their financial circumstances and repay their debt in full. Compare this to the 19% that that made a successful repayment after leaving it a few weeks to contact their lender. Making prompt contact with your lender shows a willingness to tackle your debt, an approach that will reflect on you favourably when discussing repayment terms.
By far the most common reason cited for a lapse in mortgage repayments was loss of source of income. The current financial climate has resulted in a rise in the unemployment figures and lenders know this. So, the 43% of people for whom this was the case generally found that their lender was sympathetic to their predicament as long as they were kept abreast of the situation. Indeed, 60% of borrowers in arrears thought that their lender had treated them fairly and been helpful throughout the process. This is opposed to one in five that thought their lender had been unjust or treated them unfairly.
Of all those people that found themselves falling behind with their mortgage repayments, just under half of them sought out independent dept advice. This figure was reflected in the statistics of those that successfully repaid their mortgage arrears in full. Obviously, there is always the risk that failure to meet mortgage repayments could result in repossession of your home. The importance of consulting a professional debt adviser cannot be underestimated. The right adviser will help you to understand your different options and advise you on the right way to go. The quicker you do this, the better.