It is essential to learn all you can about how to avoid house repossession. A slight change in your circumstances, an illness, or job loss can prevent you from making your mortgage payments on time and cause you to face the possibility of repossession or eviction. It is better to learn all you can about how to handle this kind of situation before it occurs. But the truth is that, in most cases, if you are well informed, you can actually stop repossession even after the process has been initiated by your lender says John Matthews from advice site Repossession Stoppers.
Here are some valuable tips that will help you to keep your home.
Draw up a Budget and Reduce Expenditure
If you discover that you are struggling to meet up with your mortgage payments, you need to discover what is consuming your income. Drawing up a budget will help you to discover what you can cut off to get more money to settle your monthly interest payments. You can get help from several websites that offer free personal budget advice and budget calculators.
After you evaluate your monthly expenses, you should cut down on luxuries like eating out, going on expensive trips, cable TV subscriptions, and funding expensive hobbies. You will also save some money by reducing your utility bills, cutting down on credit card payments, and renegotiating your insurance policies.
Increase Your Income
In addition to reducing expenses, you can also raise more income for your family. First, if you or your spouse is not working on a full time job, you should explore as many job opportunities as possible and ensure that both of you are earning a living wage. You may even decide to work overtime if your organisation permits it. Remember that you can make some extra income (without paying additional tax) through the government’s rent a room scheme. So you can rent out one of your spare rooms (or create one) and use that to offset some of your mortgage payments.
In addition, you can earn more money from selling items you no longer need in your home. If you have some old valuable items lying around your home or garage, you can set up an auction, sell them, and raise some money. You may also earn additional cash through handicrafts which you can sell on eBay or other popular online trading sites.
Make Your Mortgage a Top Priority
If you are finding it difficult to pay several debts like credit card payments, your car loan, insurance premiums, and other regular payments, you should prioritise your mortgage. Make sure you settle your mortgage payments first before you pay your credit card debts. It is vital to note that defaulting on your credit card payments will not make you lose your home. But if your name ever goes on the repossession list, it may be very difficult for you to get a good mortgage facility in future.
Even when you are not able to make the full payment, you should endeavour to pay off as much as you can. Thus, you will demonstrate your commitment to your lender and build up goodwill that will prevent them from initiating any repossession process against you.
Pay Extra in Advance
When you are financially stable and you have some surplus, make extra mortgage payments. It will serve as a buffer and bail you out of crisis if any unexpected event occurs. Take full advantage of the option for advance payment which is usually included in most mortgage contracts. In the UK, some lenders allow you to make an extra payment of about £500 monthly or up to 10 percent per year.
ith this kind of flexibility, if you experience some financial difficulties, you will be able to negotiate for lower monthly payments or even take several months off without paying anything.
Explore Your Benefits
Take full advantage of government support schemes that will give you financial support if you are finding it difficult to pay your mortgage. You may apply for the Support for Mortgage Interest (SMI). This scheme can help you to pay part of your mortgage interest.
A standard interest rate has been set, so the actual amount you will receive is not determined by how much you owe. You will be allowed to make a claim for SMI if you own the house and you are also claiming any of the following:
* Pension credit
* Employment and support allowance
* Income-based job seekers allowance
Currently, the UK Government pays interest for loans that are up to £200,000 if you are out of work for more than 3 months, with less than £16,000 in your bank account, and you have an unemployed spouse.
Contact Your Lender Early
Contact your bank or mortgage lending institution as soon as you notice you can’t make your monthly payments. Never wait till they contact you. Here are some of the alternatives you should explore while discussing with your lender:
* Pay your lender what you can afford now and let them know how you intend to pay the balance.
* Negotiate for a short break in payment and set a date when you will start paying the arrears
* Ask for an extension of your mortgage so you can start paying a smaller amount per month.
* Apply for the Homeowner Mortgage Support Scheme. It allows you to reschedule or postpone your interest payments for up to 2 years and it covers home loans of up to £400,000. You can get the list of the latest terms and conditions on the Citizens Advice Bureau website.
* Change the terms of your loan from repayment to an interest-only loan.
Those are some of the easiest ways to keep your home during financially difficult times and avoid house repossession. In summary, any time you are struggling to make your mortgage payments, you must realise that you are not the only person going through tough times. Look inward first and cut down on unnecessary expenses, then look for ways to increase your family income. Explore all the avenues for government assistance and make sure you always contact your lender first and work out a method of paying your loan so you can keep your home.