In times of recession, available cash can get squeezed to the point where it may become difficult to continue to service your mortgage. What can be done? There is quite a bit that is possible, so there is no immediate need to panic.
If you are frightened, you might soon default on your mortgage repayments. It is important to waste no time in contacting your mortgage provider if you are unable to make payments. A face to face meeting is preferable to a telephone conversation. You are more likely to come away with a satisfactory result by going to the mortgage provider and speaking in person.
Take control of the situation. The first thing to do is explore the possibility of a better deal. This is not easy in the present climate, but if for example you have a ‘no status’ mortgage for some time. You might be able to argue you have been reliably repaying you mortgage for years and have proved your creditworthiness. If so you can ask, request that you be placed on a regular mortgage rate which will probably reduce your repayment by as much as 1 or 2 percent. This may make continuing to pay your mortgage less of a strain on your finances.
If the above isn’t possible, you might try asking your mortgage provider for a payment holiday. If agreed, this is a very useful tool, especially if you have been out of work and have started a new job. It will give you a chance to get your finances straight before resuming mortgage repayments.
Another tactic is to request an extension of the mortgage term limit, say from twenty years to twenty five years, or even thirty years. Because we are all living longer mortgage companies are less concerned by extending mortgage terms. If you are successful, it could reduce you repayments to a more acceptable level.
Lastly, if you can no longer meet your repayments come to a temporary agreement with your lender. Repossessing homes is not what your mortgage company wants. Repossessed homes in a dead economy don’t sell well and the mortgage company would rather strike a deal with you in the hope you’ll soon find your feet.
The important thing is not to bury your head in the sand, but to immediately be pro active by sitting down with your mortgage provider and coming to a mutual agreement. The sooner you act, the more sympathy you’ll get from your mortgage company, and the sooner your mind can be put at rest.