The golden rule of managing financial problems is to keep paying the mortgage - even if it means eating less! If you can't pay all the monthly repayment, then keep talking to your mortgage lender. It is worth noting that it is quite possible to miss a few months mortgage repayments without a lender becoming too heavy handed. In fact, a lender may even suggest or even encourage a reduced monthly rate for a short period until you can make other long-term arrangements.
Making Arrangements
First of all, you will need to draw up a Financial Statement which will determine how much money you have left over each month to add to your existing mortgage payments each month. The money that you pay extra each month will help you pay off your arrears; however, most mortgage lenders will require you to settle your debt within three years.
If you are only able to contribute a small amount to your mortgage, it may be useful to send a copy of your financial statement to your mortgage lender. If the missed payments were a one-off, it may be useful to illustrate this on the form.
If you come to a payment agreement with your mortgage lender that you can keep to, they are unlikely to take further action. However, after 6 or 12 months, if there is any equity in the property, your mortgage lender may be willing to capitalise your debt. This means that the outstanding payment will be added to your mortgage and new monthly payments will be calculated. Your lender will be more likely to agree to this if you have already kept to a payment agreement for a reasonable period.
Once you have come to an arrangement with your lender, make sure you stick to it. If you don't, you will quickly lose their sympathy. If you can't keep to the deal because your circumstances have changed, explain this to them BEFORE you have to reduce or stop the agreed payments. If you can keep the deal with the mortgage lender by stopping paying some low priority debt (credit card minimum payments, for example), then it is worth doing.
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