Published: Friday, 30th May, 2008 16:30
Trapped by your mortgage?
By Frank Maguire
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WHAT should you do if you are trapped under your mortgage?
First, you must act now! The problem won’t go away unless you act. The sooner you contact your mortgage lender the better.
All mortgage companies are regulated by the Financial Services Authority which means they have to take into account their customers’ circumstances and treat them fairly.
An option that may improve your circumstances would be to change the way you repay your mortgage.
You could ask your mortgage lender to accept interest-only payments for a time. If you have a repayment mortgage and you have been repaying it for several years you could ask them to extend the term and thus lower the monthly payments.
Think carefully if you are considering handing back your keys. You will still be liable for the mortgage until the property is sold.
Worse still, if your property sells for less than market value this could mean the mortgage is not paid off in full and you could still owe money. Your name will also be on the Repossession Register making it harder to get a mortgage in the future.
Check your insurance policy; there may be Mortgage Payment Protection cover.
As a last resort, you could sell your home. You may be eligible for the national Mortgage to Rent Scheme. The scheme may be able to arrange for you to sell your home to a social landlord and remain there as a tenant.
If your lender does take you to court it is important to consult an expert. Speak to your lawyer if you have one, or the Citizens Advice Bureau, who can help you through such tricky circumstances for free.
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