![Mortgage arrears on the rise](https://oportfolio-wp-offload-media.storage.googleapis.com/wp-content/uploads/2023/05/08135924/Mortgage-arrears-on-the-rise-2-810x541.jpg)
Mortgage arrears on the rise (Source: Nerd Wallet)
Recently released data shows that unfortunately mortgage arrears in the UK are on the rise, due mainly to the ongoing costs of living crisis. An increase in both mortgage interest rates and the general costs of food and utilities over the last few months has meant that thousands of mortgage borrowers have found it increasingly difficult to keep up with their payments. So, how could speaking to a mortgage advisor help you avoid mortgage arrears?
What Are Mortgage Arrears?
A mortgage arrears occurs when people are late paying their monthly mortgage commitment. When you secure a mortgage, you make a legal commitment to pay your lender back the money they have lent you for a mortgage including interest incurred, per month over a period of time. If you break this contract by not following the agreed monthly payment, your credit and your property can be at serious risk.
When you don’t pay your monthly mortgage commitment on time, your account will be in arrears. That means that you owe the bank money, and this will show on your credit file. In worst case scenario, if you keep on missing mortgage payments, your account will go into serious default and the lender can start proceedings to repossess your property. If your property gets repossessed, you may not be able to get a new mortgage again for at least 10 years, if ever in some extreme cases. Once your mortgage starts going into arrears, you will need to speak to a debt help organisation as these will be the best people to speak to at this stage. However, if you feel that you might potentially be struggling with your mortgage before you get into arrears, then a mortgage advisor can potentially help. This is why it is important to stop mortgage worries in their tracks before things get worse.
Mortgage Arrears Are On The Rise
Due to the rising cost of living and mortgage rates rising significantly over the last few months, mortgage arrears and people struggling to pay their bills in general has increased. UK finance have recently released some pretty shocking figures around home loan arrears. Here is a breakdown of what they have concluded:
UK Finance say that there were 76,630 residential mortgages in arrears of 2.5% or more of the outstanding balance in the first quarter of 2023. Up 2% compared to the previous quarter. There were also 7,030 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance in first quarter of 2023. An increase of 16% compared to the previous quarter. Finally, UK finance revealed that there were 410 buy to let properties repossessed in the first quarter of 2023, 28% more than in the previous quarter.
What Can I Do If I Am Struggling With Mortgage Costs
As we have previously mentioned, if you are already in mortgage arrears, the best thing to do would be to contact a debt help and guidance company as they will be able to help you to re-structure and satisfy your debt and hopefully rebuild your credit profile. However, if you have not gone into any missed or late mortgage payments, but you think that you are or could soon struggle to pay your current mortgage deal, you can always give our team of advisors a call. In many cases you may be able to switch to a new mortgage lender or rate and/or re-structure your mortgage debt so that you are on a more manageable mortgage product.
This won’t be the case for everyone, but if our advisors can find a way forward for you to and help you to secure a more manageable deal, then we will be more than happy to help. Give us a call if you want to see how we can potentially help.