Struggling to make mortgage payments? 5 things you should do if you find yourself falling behind
You might think it will never happen to you but it’s easy to get into mortgage arrears if your situation changes or the unexpected happens.
If you experience a temporary setback or a long-term change in your circumstances, it doesn’t necessarily mean that you’re going to lose your home. There are supports out there to offer advice and practical support - even if you’re facing the threat of repossession.
Abhaile is a state-funded mortgage arrears support service that works to help homeowners find the best solutions to their home mortgage arrears and, where possible, to keep them in their own homes. Homeowners can get free financial and legal advice and help from experts, who are available through the Money Advice & Budgeting Service (MABS).
We spoke to James Quinlan, dedicated mortgage arrears adviser (DMA) with MABS, to find out what to do if you’re struggling to make your mortgage payments.
1. Get expert advice
“We always say it’s never too early or too late to contact MABS,” says James. “When you start getting final demand letters, or any letters from your lender saying they will be taking action down the road, it can be frightening for people. You need assistance. You need to speak to somebody.”
Abhaile offers homeowners help to navigate the Mortgage Arrears Resolution Process (MARP). Mortgage arrears advisers regularly attend County Registrar Courts around the country to provide support for people who have already been issued with a court summons. Alternatively, you can contact an expert financial adviser directly via the Abhaile website. The expert financial adviser could be a personal insolvency practitioner (PIP) or an accountant.
“If you want to handle it by yourself, then do so by all means,” adds James. “But we encourage you to give yourself a chance to see what options are open to you by talking to an adviser with many years of experience finding solutions to mortgage arrears cases.”
2. Speak to your lender
James says the worst thing that people can do is ignore the problem. The sooner you engage with your lender, the more chance there is of finding a resolution.
“When you find your home is at risk, it can be daunting,” says James. “The first thing is not to hide away from it - speak to your lender and tell them you’re having difficulties.”
Early engagement makes a real difference to achieving a resolution as it gives the homeowner time to consider all options and avail of any supports and advice that are needed. The lender is obliged to follow the MARP process so if you run into arrears, they have to advise you by letter. They are required to give you full information about the MARP so that you’re aware of what you’re supposed to do.
Lenders will look for a financial statement and supporting documents like proof of income, which could be payslips or social welfare receipts. Early engagement can help you negotiate an arrangement with your lender based on what you can afford to pay and what they’re happy to accept. This always includes reasonable living expenses for the borrower.
If you are nervous about dealing with your lender or intimidated by the prospect of filling out financial forms, you can contact MABS for advice. A dedicated adviser will work with you and your lender to find the best solution for your situation.
3. Figure out what you can afford to pay
Part of the engagement process is working out what you can afford to pay and agreeing new repayment terms with your lender. This might seem complicated but help is at hand. Homeowners can get expert free advice and help from MABS to ensure that they can find a solution that suits both parties.
“The payment has to be consistent but it has to be based on your affordability,” James explains.
It’s in the interests of both parties to settle on a payment plan that will work. These revised terms are a second chance for you to rebuild your relationship with your lender and to get your payment history back on track.
“You need to start building a history,” adds James. “A history can start today. Last week, we can’t change - but we can change from today on.”
4. Commit to a short-term arrangement if it’s offered
If you can agree to revised terms with your lender, you’ll probably be asked to demonstrate that you can maintain payments for a set period. This is your opportunity to prove to your lender that you can satisfy a new payment plan in the short term before agreeing to a more long-term option.
“Most of the lenders, if they agree to an amount, will say ‘Right, we’ll give you a six month trial period’,” explains James. “Adhere to the six months. It’s a trial basis to see if they can put you on to a long-term arrangement.”
This initial trial can be the first step towards getting back on your feet and coming to a lasting resolution.
“It can be only six months,” he adds. “It is hugely important to take that. It is a means to an end at the end of the day. Don’t be afraid of the process. Get involved in it.”
5. Consider all your options
The advantage of contacting Abhaile is that they can take you through all of your options, regardless of your situation, and outline the best course of action for you.
“We will advise you about all the stages all the way along, help you with any court situation and give you a list of people who can help – personal insolvency practitioners (PIPs), accountants or solicitors,” says James. “We’ll give you all those lists and arrange vouchers for you for these services which can be accessed for free.”
Even if your mortgage is deemed unsustainable, there may still be a chance to stay in your home. Personal Insolvency Arrangements (PIAs) or the Mortgage to Rent (MTR) scheme may be viable alternatives depending on your situation. In over 90pc of PIA cases, debtors have been able to stay in their home.
Understanding all of the available options gives you a better perspective on your situation and it can help to relieve some of the stress. Nobody ever imagines they’ll end up in this position. Knowing that help is at hand and that there are services to help you can make a real difference.
“When that letter comes through the door telling you to pay up your mortgage within seven days or we’re taking you to court, it can really frighten people,” says James. “There are a lot of options available to people but the mere fact of knowing what’s available and just getting professional advice at that stage is hugely important. If you are sick, you go to the doctor, if you are struggling to pay your mortgage, it is important to get proper advice from an expert.”
If you or somebody you know is in mortgage arrears, or you fear you are at risk of losing your home, you may be eligible for free face-to-face financial or legal advice under the Abhaile scheme. For information, call the MABS dedicated helpline on 076 1072000, or visit the website.