Summer 2008
When I took out my mortgage two years ago I could manage the payments without any trouble, but now the discount period has come to an end and the payments have shot up I'm really struggling. I may also be in danger of losing my job. Do you have any advice?
Don't panic, but do sit down and take a long, hard look at your finances. Do a budget (looking at all your incomings and outgoings, any savings and any debts) and try to plan ahead, looking at whether you can increase your income and/or cut back on any of your spending. For more information have a look at the Citizens Advice website www.adviceguide.org.uk
Do prioritise your mortgage payments but don't be tempted to take on more credit or debt to deal with payment problems.
Check whether you have mortgage payment protection insurance (MPPI) and if so make sure your policy covers your circumstances. If you are thinking of taking out MPPI be careful - it can be costly and poor quality and won't always give you the protection you need. Make sure you shop around and get independent financial advice.
If you have already fallen behind with payments, or you do lose your job, let your lender know straight away. They should try and help you through temporary payment difficulties, for example by allowing you to pay interest only for a limited period. For more detailed information see our fact sheet on dealing with mortgage arrears on the North East Derbyshire Citizens Advice website www.ned-cab.org.uk, or talk to a CAB adviser.)
Get free, confidential, independent advice from the CAB without delay if you are in arrears and facing court action by your lender.
I own my home but have fallen behind with my mortgage payments. I've heard about companies that can clear your debts, buy your home and then rent it back to you but I want to know more. Can you help?
The schemes that you talk about are generally known as mortgage rescue, buy-back or sale-and-lease-back schemes. They are designed to allow you to stay in your home as a tenant or as a shared owner (paying part rent and part mortgage).
Private companies buy your property and rent it back to you. But you need to be careful, as not all of these companies are trustworthy. If you're thinking about signing up to a mortgage rescue scheme with a private company then it's important to check any terms and conditions very carefully.
Things that you need to know about include:
- Privately run schemes often buy homes below the market rate.
- You will probably have an initial tenancy which runs for six or twelve months and, during that time, the landlord might charge you what seems to be a reasonable rent. However, after that, if your tenancy is renewed, you may be charged a much higher rent or one which is not that different from what you would have paid if you were still paying off the mortgage and the arrears.
- The type of tenancy offered may give you little protection from eviction which means that the landlord might be able to evict you.
Make sure you have thought about all the options before you make an agreement with a private company. Try talking to your mortgage lender first to see if you can come to an arrangement to clear your arrears. A CAB debt adviser can help you do this and give you advice about any other debts.
I have not been able to pay my rent recently and I have just received a Claim for possession from my local county court. What can I do?
Once your landlord has given you notice, this does not necessarily mean you can be evicted. In most cases a court order is needed, and further notice of court proceedings is often required. Whether the court will allow the eviction will depend on the kind of tenancy you have and the reasons for seeking eviction.
If you do not pay your rent, your landlord has a legal right to ask a court to evict you. You need to act quickly if you want to try and stay in your home once you receive a claim for possession.
If you are on a low income and can't afford the rent you may be able to get some help with your payments by claiming housing benefit. If housing benefit does not cover all of your rent and you need more help, as long as you are entitled to some housing benefit (or council tax benefit), you can ask the local authority for a discretionary housing payment. Only they can decide whether to give you this help, so you should give them as much information as possible.
If you can afford to pay your rent and pay a little extra towards any arrears, you should talk to your landlord - they may be willing to make a repayment agreement with you and stop the court action. If they do, it is important that you make the agreed payments regularly.
If the landlord will not agree to accept your payments get free, independent, expert advice from us on 0844 848 9800
Last updated: April 21, 2008