Mortgage Cantpay


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Mortgage Cantpay

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Mortgage Cantpay

  1. 1. April 2010Ourhere to help you guides – No selling. This guide is part of our Buying a home series. No jargon. Just the facts No selling. No selling. No selling. No selling. No selling. No jargon. No jargon. No jargon. No jargon. No jargon. Pensions andEveryday Saving and If things Buying a retirement. money. investing. go wrong. home. about problems paying your Available from our helpline or website © The Consumer Financial Education Body Limited. April 2010 CFEB ref: COMS0007bHNo selling. No jargon. Just the facts. mortgage.If you would like this guide in Braille, large print oraudio format, please call our Moneymadeclear helplineon 0300 500 5000 or Typetalk on 1800 1 0300 500 5000.(Calls should cost no more than 01 or 02 UK-wide calls, and areincluded in inclusive mobile and landline minutes.)To help us maintain and improve our service, we may recordor monitor calls.
  2. 2. Moneymadeclear guides are brought to you bythe Consumer Financial Education Body (CFEB). This guide isWe aim to help you understand financial mattersand manage your money better. for you ifJust the facts You are Contentsabout problems unable to meet your mortgage repayments. Act now 2paying your It’s about getting out of Key things to think about 5mortgage. arrears and: • explains what you can do; Your questions answered 9 • ets out what help is sWe try to ensure that information in this guide, much of which comes from external Next steps 10sources, is correct at time of print. It is possible that some of it is oversimplified, or may available; andbecome inaccurate over time, for example because of changes in UK law. You should • nswers some of the aalways check the current position before you take action. Jargon buster 11 questions you may have.This is general information intended for consumers of UK financial services resident inthe UK. It does not take account of individual circumstances. When making decisions 12 Useful contactsabout your own circumstances you should consider whether to consult a financial orother professional adviser. 1
  3. 3. ActnowIf you’re having trouble or think to consider your circumstances, and Work out a budgetyou may have trouble making will have procedures for dealing with Key points List your income and your spending. cases like yours. Find out if they canyour mortgage repayments, This will help you work out where give you any help – see page your mortgage lender your money is going, and plan for the future. Advice agencies may be able • peak to your mortgage Sas soon as possible to discuss Get money advice to help you with this or you can use lender – tell them what youyour difficulties. Some advice agencies specialise in our online Budget calculator at are doing and find out if theyThey need to know if there are specific money problems – they can give you can help – see page 6.reasons why you cannot or may not be Use this plan to help you pay all free and independent advice to help • et advice from a specialist Gable to make your mortgage payments. your essential bills first, such as your you plan and solve your problems –See the Jargon buster on page 11 see Useful contacts on page 12. mortgage, utility bills (electricity, gas, agency.for an explanation of some words you water), insurances, council tax and • Pay what you can.may come across. housekeeping.For information about mortgages, get Key pointsour Mortgages guide – see Useful Pay what you cancontacts on page 12. Even if you can’t pay the full amount, • mortgage is a loan secured A you should try to pay as much of against your home, so if your mortgage payments as you canThings to do you can’t repay it and you afford. This shows your lender you are willing to make an effort to pay, andSpeak to your mortgage get into arrears, the bank or may increase your chances of keepinglender building society can sell your your home. Your lender should beLet them know why you can’t pay your home to get back its money. willing to talk to you about accepting less than the full monthly payments formortgage and tell them what you are • f you fall behind in your Idoing. All mortgage lenders regulated a time. Speak to them and see what payments, the money you you can the Financial Services Authority (the owe is called ‘arrears’.UK’s financial services regulator) have2 3
  4. 4. Things to avoidTaking out a loan to pay Key points Key things toyour debtsThink seriously before taking out aloan to cover your repayments. Theseloans can be very expensive and are • etting another loan to pay G your debts may not solve the problem. think aboutoften also secured on your home, • ou’re still responsible for Yputting it at greater risk. If you’re paying your mortgage if youthinking about getting a further loan,speak to one of the advice agencies hand your keys back to the Financial help If you claim Income Support or Jobseeker’s Allowance, your locallisted in Useful contacts on page 12. lender. Jobcentre Plus office will normally • ou’ll still have to pay any Y You may be able to get some financial give you some help with your help through insurance or State benefits.Handing back the keys outstanding shortfall if the mortgage repayments.Think carefully if you can’t afford your lender repossesses your How much help you get and when it Insurancemortgage and want to give the keys home and sells it. starts depends on when you took outback to your mortgage lender so they If you can’t pay your mortgage because your mortgage and how long you’ve • pecialist advice agencies S your income has fallen, you should been receiving Income Support orcan sell the house. Until it’s sold youwill still be responsible for paying the can help you sort out your check whether you have any mortgage Jobseeker’s If your house sells for less debts. payment protection insurance. Even so, these extra benefits will onlythan you owe, your mortgage won’t If you do, find out if your policy covers help to pay the interest part of yourbe fully repaid and you’ll have to pay your circumstances and make a claim loan, and they are paid at a rate set bythe shortfall. The lender can start right away. the government.chasing you for this at any time up to If your claim is refused, and you don’tsix years after the sale (five years in If you or you partner are 60 or over, agree with it, you may be able to take you may be entitled to PensionScotland). Your name will also be on your case to the Financial Ombudsmanthe repossession register and it will be Credit. You may get an extra amount Service – see Useful contacts on to cover your mortgage interestharder for you to get a mortgage in page 13.future. Get advice first. payments. To find out more, get a copy of the Pension Service’s Government help booklet – see Useful contacts on You may be able to claim some page 13. benefits to increase your income. Make sure you claim any tax credits Contact your local Jobcentre Plus you’re entitled to – see Useful contacts office (details in the Phone Book) or on page 13. speak to an advice agency – see Useful contacts on page 12.4 5
  5. 5. Things you can Your monthly payments will increase because of this. Your mortgage lender For an interest-only mortgage, Other government you can also consider:do to pay off your is unlikely to agree to this if you’ve • Taking a payment holiday helpmortgage arrears failed to stick to revised repayment arrangements in the past, or if the For example, if your mortgage is linked Homeowners Mortgage balance of your mortgage, including to an endowment policy and you can’tYou could think about any of the Support the cost of the arrears, comes to more afford both sets of payments (thefollowing: than the house is worth. interest payments on the loan and the You may qualify for Homeowners payments towards the endowment Mortgage Support if you’ve hadStart repaying your arrears as Extend your mortgage period policy), you could ask the endowment a temporary, unexpected drop insoon as you can policy company if you can stop paying income and you’re unable to meet If you have a repayment mortgage your mortgage payments. Speak toArrears can often lead to extra the endowment policy for a while. You and you’ve been paying it back for a your lender or a free and independentcharges, so will increase the amount will have to arrange with them how while, you could ask your mortgage advice agency to find out if you qualifyof money you owe. Paying them to make up the backlog of payments lender to extend the remaining for this scheme – see Useful contactsoff quickly may mean you have less once you restart your policy. term. This will reduce your monthly on page for a short time, but it will be payments, but you will be making • ashing in or selling your Ccheaper in the long run. them for longer – perhaps into your endowment policy Mortgage Rescue Scheme retirement. Also, you will be paying If your endowment policy has beenMake extra payments more for your home overall. running for several years, it may You may qualify for a government- have built up a reasonable amount backed mortgage rescue schemeYou can pay off your arrears by paying a This extension is more difficult to that you could use to pay off your if you’re having serious difficultiesbit more each month than your monthly arrange if you have an interest- arrears. This would mean cashing in paying your mortgage and will becomemortgage payments. Just make sure only mortgage and are using an or selling the policy. homeless if your home is can afford the extra amount. Even endowment policy, PEP or ISA to pay This scheme may arrange for you toif your mortgage lender doesn’t think off the loan. If you did this, you would have to take sell your home to a social landlord andyou’re offering enough, pay the extra out a repayment mortgage, or find stay there as a tenant. Advice agenciesamount anyway. Tell them why you can Ask to delay paying your some other way to make sure you can help you work out if you qualify –only afford this much – they may not be arrears repaid the money you borrowed. see Useful contacts on page 12.aware of your circumstances. If you can now manage to meet your Before you cash in an endowmentAdd the arrears to the monthly payments, but can’t afford to pay anything towards the arrears, you policy or change to a repayment mortgage, you will need to speak As a last resortmortgage could ask your mortgage lender if you to your mortgage lender and the If you can’t afford your mortgageYou could ask your mortgage lender can delay paying arrears for a time. endowment company. payments and you think this situationto consider ‘capitalising’ your arrears. If you cash in your policy early, won’t change in the long term, you mayThis means adding them to your total the value of your policy might be think about selling your home balance, spreading the considerably reduced. You should thinkarrears over the remaining period of However, before you do this, think carefully before you do this, and firstyour mortgage. carefully about where you will live. ask your endowment provider how You may not get help from your local much you would get.6 7
  6. 6. Your questionscouncil with finding a place to live if Make sure you deal with a regulatedthey think you have made yourself firm so you will have access tointentionally homeless. complaints procedures if things go answered wrong. Check the FSA Register toSelling your home and see if a firm is regulated or go to ourrenting it back website for more information – see Useful contacts on page 12.Some companies offer to help youif you get into financial difficulties with Think carefully before choosing thisyour mortgage payments by buying option and make sure you understandyour home and renting it back to the consequences. If you’re unsure, talk to a free and independent moneyyou for a fixed term. They can buy Question Questionyour home quickly, sometimes within adviser – see Useful contacts on pagea week, but more usually between 12. For advice on how it may affectthree to four weeks. You may hear your right to Housing Benefit, contact What should I do if my lender How do I make a complaint?them called ‘rent back’ or ‘sell-to-let’ your local council – see Useful contacts takes me to court?schemes. on page 13. Read the Department for Answer Work and Pensions’ guide Advice for AnswerSelling your home in this way may If you feel your mortgage lender or homeowners – sale and rent back. Itallow you to clear your debts and stay Don’t ignore the paperwork you are insurance company is not dealing with is available online, or you can ask yourin your home. But watch out as: sent. Get advice from the agencies your case fairly, ask them for a copy local council to print it out for you. listed in Useful contacts on page 12. of their internal complaints procedure.• ou will normally be paid less than y This should tell you how to get things the full market value of your home; Even if a lender starts court sorted out quickly and easily.• ou should check how long you y proceedings, you won’t automatically lose your home. The lender must If you’re not happy with the answers, can stay in your home as your Key points continue to look for ways for you to you may be able to take the matter to rental agreement may not be pay your mortgage, so you should the Financial Ombudsman Service – renewed, so you could still have to • ou may be covered by an Y continue talking to your lender and see Useful contacts on page 13. leave after the fixed term ends; insurance policy for your paying as much as you can. You can also find useful tips about• ou could still be evicted if you y mortgage repayments. If you are asked to go to court, making a complaint in our Making a breach the terms of your tenancy, for a money adviser from one of the complaint guide – see Useful contacts example if you fall behind with your • ou may be eligible for help Y agencies listed in Useful contacts (on on page 12. new rental payments; and from the State if you’re page 12) will be able to help you. They• if the person or firm buying your home receiving benefits. can help prepare your case and may gets into financial difficulties, the be able to represent you. Make sure property could still be repossessed • ou can discuss the Y you go to the court hearing. and you might have to leave. different options with yourThe Financial Services Authority (FSA) mortgage lender.regulates the sale of these schemes.8 9
  7. 7. Next Jargonsteps buster Some key words and phrases Mortgage explained. A loan secured on your property. If you don’t keep up the mortgageStep 1 Step 3 Arrears repayments, your home may be Money you owe when you fall behind repossessed. on your loan or rent repayments.Speak to your mortgage lender as Work out your budget and pay assoon as possible to see if they can much of your mortgage as you can Mortgage lender Endowment policy The company you take out yourhelp – the sooner you act the better. each month. An investment plan that you usually mortgage with.Discuss your options with them and pay into each month, which pays afind out which one may be best for you. lump sum when it matures. Personal equity plan (PEP) A way of holding investments thatStep 2 Step 4 Individual Savings Account is sometimes used to pay off a (ISA) mortgage. You cannot get a new PEP A tax-efficient way of saving or now. All PEPs automatically becameTalk to a money advice agency if you Check whether your repayments are investing, with limits on how much you stocks and shares ISAs from 6 Aprilneed help sorting out your debts covered by any insurance policy you can pay in each tax year. 2008.– they offer a free service. have or whether State benefits may help. Interest-only mortgage Repayment mortgage A mortgage in which you pay only A mortgage in which you pay off the the interest charges of the loan each loan amount (capital) and interest at month. You are not reducing the loan the same time. Don’t panic – specialist amount (the capital), and you must advice agencies can help you repay this in some other way at the Term sort out your debts and plan end of the term. The length of your mortgage, normally your spending. stated in years.10 11
  8. 8. Useful Consumer Credit Counselling Business Debtline Service (CCCS) 0800 197 6026 0800 975 9558 Free, confidential and independent Offers a structured programme of advice advice for self-employed people and on how to manage your money. small businesses. Credit Action Other helpful contacts 0800 138 1111 Local council Works in partnership with the CCCS Your local council can advise you ifConsumer Financial Education Body • Mortgage calculator to help you a and publishes factsheets about debt you’ll qualify for Housing Benefit if you estimate your monthly mortgage and budgeting. want to enter into a sale-and-rent-To order other Moneymadeclear back scheme. Look in your Phone payment.guides, or for general information Book for details. Consumer Director guidance Call rates may vary – check with 0845 404 0506Helpline: 0300 500 5000 your telephone provider. Jobcentre Plus OfficeTypetalk: 1800 1 0300 500 5000 Does not provide debt counselling, Your local office can tell you if you are Financial Services Authority (FSA)(Calls should cost no more than 01 or 02 but can give advice when a creditor or eligible for any State benefits – look in Consumer helpline: 0845 606 1234UK-wide calls, and are included in inclusive debt collector is acting unlawfully. your Phone Book for and landline minutes.) Minicom/Textphone: 08457 300 104 Financial Ombudsman Service Money Advice ScotlandOther Moneymadeclear guides To check the FSA Register, or to 0141 572 0237 South Quay Plaza report misleading financial adverts 183 Marsh Wall• Getting financial advice or promotions. Provides details of advice agencies London E14 9SR• Making a complaint 0300 123 9 123 or 0845 080 1800 throughout Scotland that offer a free,• Mortgages independent, impartial and confidential Other organisations that can helpFor more titles, call us or go online you if you have money problems advice service. The Pension Order line: 0845 731 3233 Advice UK National Debtline 020 7469 5700 0808 808 4000 Minicom/textphone: 0845 604 0210On our Moneymadeclear website can find For a Pension Credit booklet. All members provide free and confidential Provides a free, confidential and• Budget calculator to help you a advice, but not all provide money advice. independent telephone advice service. work out if you have enough money Directgov coming in to cover your bills; Citizens Advice Bureau (CAB) Payplan Tax credits helpline: 0845 300 3900 0800 280 2816 Minicom/Textphone: 0845 300 3909• Cut-back calculator to help you a see where you can save money on Offers fee, confidential and face-to-face money advice. Look in the Phone Book Free confidential advice on debt For information about tax credits. items you buy regularly; or on its website for your local bureau. problems.12 13