mortgage arrears Archives

Mar 14

Salary cut is putting mortgage at risk

I am experiencing severe problems with paying my mortgage as my working hours – and salary – have been reduced by half. What can I do to ensure I don’t lose my house?

With increasing unemployment a consequence of the current recession, more and more people will experience difficulties in meeting their mortgage repayments. The critical point to bear in mind is to ensure that you approach your Lender immediately you are experiencing difficulties as there are various options open to both you and them in addressing short-term problems.

Sadly, the majority of people, probably due to the stress of the situation, stick their heads in the sand and do nothing, allowing arrears to build up over a period of months. Inactivity and the reluctance to meet the problem head on will cause more problems than it solves, as your Lender will become sceptical as to your genuine willingness to find re-employment or resolve your financial problems.

By contacting your Lender immediately you can discuss the various options available. Depending on the extent of mortgage involved your Lender may be able to offer you a “payment holiday” period while you find re-employment or get yourself back on your feet. Do not pretend that there isn’t a problem. Meet your problem head on. You may be surprised to hear the various solutions available.

Feb 28

Will sale to son stop home repossession?

I am currently suffering serious financial problems. I want to transfer or sell my house to my son who has lived in it for the last 22 years. Could this prevent the property being repossessed?

By transferring the property to your son I presume you mean gifting it – as opposed to selling the property to your son in an arms length transaction at the full market value.

Any transfer to your son for no consideration (a gift) could be deemed to be a deliberate attempt on your part to defraud your creditors under the terms of the Insolvency Acts, and could be overturned by your Trustee in Bankruptcy should you subsequently be declared bankrupt.

If you are in arrears on your mortgage you will not be able to transfer, or gift the property to anyone without the consent of your Lender and this consent will only be forthcoming upon repayment of the amount owed under the mortgage.

In other words, whether you sell to your son, or any third party, will amount to the same thing whereby the Lender will have first call on the proceeds of sale.

Dec 8

Should I wrap up all debts in first mortgage?

I have three credit card debts and a student loan outstanding – and am about to apply for my first mortgage. Would it be more sensible for me to include those debts in the mortgage application so I end up with one loan?

You will be required to disclose any existing debts or loans which you may have in any mortgage application in any event. The mortgage company will also carry out extensive financial checks against you in order to identify the extent of existing loans, or debts, that you may have before deciding to add to these loans by granting you a mortgage.

This is all carried out by your lender in order to establish that you can actually afford to make the mortgage repayments and that you are not over-burdened with existing liabilities which may result in your falling into arrears with any mortgage repayments.

It may well be that as a condition of your mortgage the lender will require you to settle some existing loans, or consolidate them under the one mortgage loan – providing this meets their lending criteria and satisfies any loan to valuation requirements which they may have.

Before you incur any expense in making any mortgage application you should satisfy yourself that you meet the lending criteria and that all existing loans are fully disclosed as your lender will find out about them in any event!