What to do if you can’t make your mortgage payment

What to do if you can’t make your mortgage payment

23:10 PM, 16th February 2012, About 12 years ago 2

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Hopefully none of my regular readers will ever find themselves in this position as they will have built up a liquidity reserve, enjoy positive cashflow and will have paid off expensive forms of debt before they ever think of committing themselves to making repayments on their cheap interest only buy to let mortgages which also attract tax relief.

However, there will always be a few people who have not done this, will have mortgaged themselves to the hilt with no cash reserves and got themselves into all sorts of debts and financial difficulties.

I know this to be true as my first few years in business involved helping property people out of sticky situations. My only qualifications in this are real life experience. If you want professionally qualified advice go to the Citizens Advice Bureau.

My suggestions come from the fact that two thirds of my clients in the six years leading up to 1996 found themselves in negative equity and couldn’t make ends meet due to high interest rates. I know that several landlords and home owners are only OK financially whilst interest rates are low. A tiny increase in interest rates or change in circumstances could send them over the edge.

All good debt councillors will tell you not to bury your head in the sand and that’s absolutely true. Did you know though that if you pay just £1 off your mortgage one month you are not technically in arrears as you have to be one full month in arrears for your mortgage lender to report arrears to the credit referencing companies?

Whether you have a large portfolio of mortgages or just one, that little piece of information could make a massive difference to you one day. Feel free to share this piece of information as your friends and family probably don’t know this and it could be a life saver to them. Even if they are struggling, personal pride may prevent them from talking about their financial difficulties so if you are on Facebook or Twitter, please share this article as you could be helping somebody out.

UPDATE – if you are seriously in arrears and your mortgage lender is on the verge of taking you to court for repossession there is still a way out. It’s called the “Norgan” calculation. See this comment left on another thread by a qualified Debt Councillor.

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1:16 AM, 17th February 2012, About 12 years ago

VERY, VERY, VERY interesting info re mortgage payments.
Does the same situation pertain to BTL mortgages as aren't they considered commercial loans and therefore may not attract
such a restricted report to the credit reference agencies.
I deliberately ensure I am in arrears and get charged £30.00 every time.
But if I can pay £1.00 then I am not in arears.
So if I pay a £1.00 on the 1st monthly and then before the 1st of the following month pay the outstanding arrears and then on the 1st of the that month pay a £1.00 would that be how it works.
That would save me a fortune in arrears fees. give me healthy cashflow and effectively get a loan for a month in addition to the mortgage loan; which in my case is cheap money!
I will try your strategy and report back.
And to boot start repairing my credit files!!?

Mark Alexander - Founder of Property118

8:29 AM, 17th February 2012, About 12 years ago

Hi Paul

You may be over complicating this. The bottom line is that you will not be reported for being a month in arrears until you are a FULL month in arrears. For example, if your monthly payment is £500 and you are £499 inarrears then you are not a whole month in arrears and will not be reported.

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