Mortgage arrears can be a stressful time, but there are ways to get rid of them. First, you can capitalize on your arrears. Remortgaging to catch up with your arrears is one option. Another option is selling your home. Here are some tips for dealing with arrears. In these cases, you must put a fair offer on your home. You can also ask the court for time to sell your home and explain the reason for the arrears.
Capitalising mortgage arrears
If you are behind on your mortgage payments, you may wonder whether capitalising mortgage arrears is a solution. This process essentially adds the arrears to the original balance of your mortgage, which means your payments will now be spread over the rest of the mortgage term. However, you should not expect your mortgage company to capitalise arrears that are already too high. Instead, they will consider capitalising your mortgage arrears as a last resort.
Capitalising mortgage arrears is a solution for some people with a large debt burden. It involves rolling the arrears into the overall loan amount, usually after three months. This may result in a lower repayment rate, with no recovery of past arrears. The FSA has been conducting some supervisory work on the subject, and the process is likely to be more common in the future. In the meantime, it is important to understand whether capitalising is the best option for your particular circumstances.
It is important to remember that if you’re behind on your mortgage payments, you’re unlikely to be able to capitalise your arrears until your financial situation improves. For example, if your house is worth more than your mortgage, you should inform your lender. Taking out extra loans can be expensive and put your home at risk. So, it’s important to talk to your mortgage lender to find the best solution for you.
While some lenders may capitalise mortgage arrears, others don’t. However, capitalising your mortgage arrears allows you to repay your mortgage gradually over a period of time. Alternatively, you can switch to an interest-only mortgage if you find it easier to make the repayments every month. While switching to an interest-only mortgage is an option for some, it is vital to discuss this with a debt counsellor before embarking on this course of action.
Remortgaging to catch up with arrears
Remortgaging to catch up with your mortgage arrears can be a complicated process. The main reason behind this is that lenders view missed mortgage payments as the most serious kind of late payment. Missed mortgage payments show that a borrower has a genuine problem with their ability to repay their mortgage. However, lenders are generally lenient if there are adequate reasons and history of missed payments.
Another reason to consider remortgaging to catch up with mortgage debt is to free up some cash or tap into your equity. However, timing is critical here, as you can save money by switching to a cheaper rate or reducing your monthly repayments. Additionally, remortgaging can free up money for large expenses, such as paying off debts. Remortgaging to catch up with your mortgage arrears may be a good solution if you’re facing a difficult financial situation.
Selling home in arrears
When you are in arrears with your mortgage, you can sell your home. However, you must take into account the commission that estate agents charge. This amount must be deducted from the cash profit that you will receive. You can also use the money you receive from the sale to pay off your missed mortgage instalments. Another option is to contact a fast cash home buyer. There are several benefits to this method.
The first benefit of selling your home while in arrears is that you will avoid the high costs of collecting arrears. You will get a good sale price for your property. However, there is a big drawback to selling in arrears. Your cash profit is less than what you owe on your mortgage, and you will have to pay the difference back to the original lender. Therefore, it is important to discuss this issue with your lender before you proceed.
One of the biggest drawbacks to selling your home in arrears is that it can create negative equity. As the housing market declines, property values fall. When the value of your property falls below your mortgage balance, you may have negative equity. Selling your home in mortgage arrears may cause you to receive a shortfall, leaving you worse off than you were before. You should seek the lender’s permission before you try to sell your property in arrears.
Depending on the level of arrears, you might choose to sell your property. This will enable you to pay off your mortgage while releasing some of the equity. If you are able to sell your home for a higher price before repossession, you can use the money to pay for your new home. As long as the valuation is realistic, you may be able to sell your home in arrears and still have money left over.