Could you defer your mortgage payments?

Homeowners struggling to meet their mortgage debt could be offered lower monthly repayments as part of a new government and banking initiative.

The Homeowners Mortgage Support (HMS) scheme is being offered by 10 banking groups and building societies, with other institutions lined up to join the scheme soon.

The scheme means that borrowers who suffer a temporary loss of income could cut their mortgage interest payments by up to 70% for up to two years.

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Northern Rock to report second year of losses after mortgage arrears rise

Northern Rock will report a second year of losses following a rise in arrears and bad debts, the nationalised mortgage lender said yesterday.

Mortgage arrears increased in the first three months of the year, in line with the deteriorating economic conditions, according to the bank’s first-quarter trading statement.

The size of the losses could exceed the £900m of last year, though the switch in its strategy from repaying a £27bn government loan to becoming a major engine of lending growth makes calculating the size of the loss difficult.

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Debt warning over Mortgage Support Scheme

The government’s mortgage rescue plans may provide breathing space but could significantly increase overall debt and lead to negative equity, experts have warned.

The new Homeowner Mortgage Support Scheme, announced yesterday by Gordon Brown after the Queen’s Speech, will allow homeowners facing a sudden loss of income to cut their mortgage repayments.

This will be done by the borrower deferring a proportion of their interest payments on their mortgage for up to two years – but deferred payments will be rolled back into the total still owed.

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Debt management - helping avoid mortgage repossession

Figures from the Council of Mortgage Lenders (CML) suggest that mortgagors around the UK are finding it harder to manage their debts. At the end of June 2008, 1.33% of mortgages were at least three months in arrears. Three months later, this figure had risen to 1.44% - and by the end of 2008, 1.57% (182,600 mortgages) were in this group.

The basic fact is simple: people miss payments when they don’t have enough money to pay all their bills. However, the ones they’re missing aren’t necessarily the ones that are causing trouble. Many people find they can’t make their mortgage payments because payments to their unsecured debts are taking up too much of their income. This is something debt management can help with.

Debt management - making money available for secured debts

When someone enters a Gregory Pennington debt management plan, we talk to their unsecured lenders, asking them to accept lower monthly payments and, where possible, to freeze interest and / or waive charges.

Basically, we tell them how much our client can afford to pay them per month once they’ve taken into account what they need for their unavoidable expenses, from mortgage payments to food and utility bills. Lenders will normally understand that mortgage payments must take priority over (for example) credit card payments: most would rather accept lower payments for a while than see the borrower lose their home.

Of course, making reduced payments will mean it’ll take longer to pay off those debts - and making smaller monthly payments than originally agreed will have an impact on a borrower’s credit rating, which can make credit more expensive and / or difficult to obtain for a while. Even so, the consequences of making lower payments to unsecured debts are less serious than the consequences of missing payments to a mortgage / secured loan.

Debt management - negotiating with secured lenders

When the situation calls for it, our debt management experts will also talk to secured lenders. If one of our debt management clients is facing mortgage arrears, for example, we can talk to their mortgage provider and try to find a solution that suits both sides - a repayment plan that’ll help the borrower pay off the arrears at a realistic, affordable rate.

Are you struggling to pay your mortgage because of your debts? Click here for debt help from Gregory Pennington.

One borrowers in arrears prevents up to 80 other customers getting a mortgage

One borrowers in arrears prevents up to 80 other customers getting a mortgage

The stark warning comes as experts predicted that Britain’s mounting toxic debt will make it harder to get a mortgage in 2009.

It follows the Government’s announcement last month that it would pay some borrowers’ mortgage interest payments if they lost their job under its proposed Homeowners Mortgage Support Scheme.

Melanie Bien, of mortgage brokers Savills Private Finance: “If people thought it was bad last year, it is going to be even worse in 2009.

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Debt

What should you do if you fall into arrears with your mortgage, or generally need help with your debts?

The below list features some of the people you can call to get help with debt.

• Citizens Advice Bureau - The CAB are a first port of call for many people. They may be able to give you advice on your options.
• Think Money - Think Money can provide you with help on mortgages, remortgages and debt.
• Gregory Pennington - Reputable debt management company who provide various debt solutions.
• Debt Advisers Direct - Debt Advisers Direct specialise in debt consolidation and debt management.
• Shelter - Shelter are a housing and homelessness charity.
• Your local council - Your local council may be able to help with housing and debt related problems.

Half a million to fall behind on their mortgages in 2009

The Council of Mortgage Lenders (CML) said the number of households more than three months behind with their repayments would reach 500,000 – more than double this year’s expected figure of 210,000.

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