There are a number of reasons that borrowers may struggle with their mortgage repayments at some point or another over their repayment term. Firstly, with mortgages being set out over a relatively long period of time it is inevitable that many homeowners will find their situation changes in that time. Whether it be losing a job or switching to a new one, taking a pay cut or starting a family. Over an average of 25 years it is inevitable that things will happen to change your financial situation and this may affect your ability to pay your mortgage repayment for a month or two.
Getting into mortgage arrears is dangerous because firstly any missed payments will need to be paid at some point. So if you miss one month you might not be in too much trouble with your lender but they will then expect you to pay back the month you missed. If your financial problems persist and you haven’t paid back the months you missed you could end up in severe difficulty right up to having your home repossessed by the bank to pay back the missed payments.
Also, even if you manage to recover before it gets to this point, and missed payments will be noted on your credit history and may affect your ability to borrow in future.
So what can you do if you do find that you are having difficulty making repayments? Firstly, use an interest only mortgage calculator to see if switching for a brief time to an interest only mortgage could help you. You can find an online mortgage calculator on most comparison websites and they will show you what kind of repayments you would be making by switching.
Switching to interest only will make your repayments lower for a period of time and, although you will need to pay back the capital eventually, it gives you far more time to get back on your feet before you need to worry about it.
You other options are to switch your mortgage to another lender altogether and choose one which offers a better deal, or choose to switch to a mortgage that offers introductory discounts which will last long enough to get you back on your feet.
You could also look into extending your mortgage term to make repayments lower. The standard mortgage is 25 years but you can take a mortgage up to 40 years if you want to cut down on your repayments. The amount of interest you will pay in the long run will be higher but your repayment amount will come down, and you can always switch back later on.
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