Your options
All lenders vary. Some have very different plans and procedures in place to help people in difficulties, but here are some of the more common options you will be offered to help you get back on track:
- Change the repayment type to interest only – a short term option, as you’ll have to repay the debt too at some point.
- Extending the loan term to reduce your monthly payments.
- Reduce the payments, which is again a short term option as you’re going to end up further behind. But paying something is going to help in the eyes of the lender.
- Capitalise arrears where you add your arrears to the mortgage debt. This helps you make a fresh start without the spectre of arrears hanging over you.
- Move to a cheaper product.
Saying goodbye
Unfortunately, some borrowers will be unable to hold on to their homes. However, if you find yourself in this situation, you still have options. Possibly the worst of these, is to simply return the keys to the lender. However, it does not end your responsibility and you could end up liable for a significant amount of money even after the property is sold.
Your lender may give you the time to try and sell the property yourself. This is the best choice for many, as it keeps you in control of the process. You decide whether to sell at a certain price or not, and you will automatically get the cash after the lender has been paid off.
It really is the last resort for a lender to repossess a property. They really don’t like doing it – it takes ages and costs a fortune and, while a repossession is rarely the fault of the lender, it often reflects badly on them.
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