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mortgage with arrears

Mortgages with Arrears

Mortgage with Arrears

Can I get a mortgage with current mortgage arrears


It is unlikely any lender will take on a mortgage that is currently in trouble, no matter how plausible the explanation

You should aim to bring your mortgage account up to date as soon as possible

Mortgage lenders do not like arrears.

Mortgage lenders count missed payments as arrears. Most lenders are concerned with your payment history over the last 24 months. The more recent the missed payments, the more weight they will carry with the new lender.

1 missed payments in the last 12 months (0 missed payments in the last 3 months) will require a minimum 15% deposit

Several missed payments registered over 2 years ago will require a minimum 15% deposit. Your mortgage account must be up to date now. There should be no missed payments during the last 2 years

Current Mortgage Arrears

If you have current mortgage arrears, you will need to take some action to recover the situation. If you do nothing, the debts will get worse and ultimately the mortgage lender will seek repossession of your property. This will allow them to sell the property and use the money from the sale to pay off the debt.

However, if your lender knows that you are trying to stop the debt increasing, they might allow you more time to sort the problem out.

Depending on your circumstances, there may be things you can do.
  • Negotiate with your current lender
  • Consolidate your loans by re-mortgaging
  • Increase your income
  • Reduce your outgoings
  • Sell the property and move into a smaller property (with a smaller mortgage)

Negotiate with your current lender

You will need to be able to keep up with payments on your current instalments, as well as pay off the arrears. If your financial difficulties are only short-term, you could think about asking your mortgage lender if they will agree to reduce your monthly mortgage costs for a limited period of time.
You will need to try and come to an agreement with your mortgage lender about how to pay off your arrears.
Before you do this, you should first work out how much you can afford to pay. Work out how much money you’ve got coming in and what your outgoings are.

Re-mortgage with a different lender

Re-mortgaging may not be possible if you are currently in arrears

If you have a number of outstanding credit agreements, it may reduce the financial burden if you consolidate these loans under a single mortgage agreement. The advantage in doing this is you are spreading the cost over a longer period, this is likely to result in a significant reduction in your monthly outgoings

Please bear in mind that the mortgage loan will be 'secured' against your home. This means that if you are unable to meet your mortgage monthly payment then there is the possibility that your home could be repossessed

Increasing your income

If you are in mortgage arrears, think about whether you can increase your income to help you deal with your debts.

Are you able to earn some overtime or perhaps take on a weekend or evening job. This can be a temporary measure until you are on your feet again.

Reduce your outgoings

Look at where your money is spent. Is there a more efficient way of managing your money. Are you running two cars.

Are all the direct debit agreements you have necessary?

Sell the property

If you can't find any other way of clearing your arrears, it would be better to try and sell the property yourself, rather than wait to get evicted and let your mortgage lender sell it.

If the lender sells your property they are likely to get a lot less for it than you would, leaving you with a debt to pay. Properties which have been repossessed often sell for a lot less; mortgage lenders often sell at auctions where sale prices tend to be lower.

Selling the property yourself would give you a lump sum of money which you could use to pay off your mortgage, and which, if you have enough left over, you may also be able to use to pay off other debts.

You might need to get permission from your lender to sell the property.

Mortgage Application with arrears

If you currently have arrears on a mortgage or secured loan then it may be difficult to get another mortgage. You are likely to pay a higher interest rate on any new mortgage.

Arrears on any credit agreement will show on your credit file for up to 6 years. The more recent the arrears the more effect they will have.

Please speak to us to establish what rates are available for your situation