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Although the Royal Bank of Scotland has extended its repossesion time to 6 months, it is still important for borrowers to be vigilant if they find themselves falling into arrears.

The extension does not necessarily mean that borrowers can stop making payments altogether.  A new repayment amount will be negotiated depending on the affordability of the borrower at the time.  The mortgage may be changed from a repayment to an interest only basis or the borrowing period extended over more years.  It is important to note that any accrued interest will still need to be repaid and therefore the mortgage will cost more in the long term.

The extension is designed to give people under financial stress some breathing space and in the case of someone finding themselves unemployed, longer time in which to find new work. 

Borrowers should check their Mortage Protection Policies to see whether they are covered for unemployment insurance and if not, talk to their mortgage broker about taking out some protection.

For anyone finding themselves behind with repayments on their mortgage, it is extremely important to contact their lender in the first instance.  Lenders can only be of assistance and help if they know the situation.

For more information or help on this or any other mortgage story, call us on 0845 0262 558.

With the cost of living being stretched in the past year and the cost of increasing mortgages for the 1.4 million homeowners coming off cheaper fixed rates, some borrowers are finding it more difficult to maintain their mortgage repayments.

Here are Ten Tips to tackle Financial Problems:

1. Don’t bury your head in the sand

It’s never a good idea to ignore your debt problems.  It will only make them worse in the long term.  Taking positive action and speaking with your lender and advice organisations, will help you find ways to solve them. 

2. Talk about it

Whether you are struggling or worried about your finances, the first thing to do is to talk to your lender.   The earlier you tell your lender, the more options there will be available to solve the problem. Your lender may consider extending the term of the mortgage, changing the type of mortgage, deferring interest payments for a short period or treating the arrears as part of the original debt.  As well as your lender of course, it is always advisable to discuss issues with your partner, especially if they are also part of the mortgage.  A free, independent debt adviser should also be on your list of people to contact. 

3. Seek advice

There are many ways to gain free and independent advice about finances.  Organisations such as Citizens Advice, Shelter, National Debtline, and the Consumer Credit Counselling Service can assess your situation and devise the best course of action for you.  They will supply you with options and help you find the best way to put matters right.  An objective viewpoint can also help to alleviate stress associated with financial problems.

4. Plan early

It is extremely important to plan to look at your mortgage if you are coming to the end of a fixed-rate deal.  At least three months prior to the fixed rate ending, you should be looking to change your mortgage in order to avoid having to make higher repayments.  An independent whole of market mortgage broker will be able to research the best deals on the market for you before your fixed rate expires.  Problems can arise when you have not budgeted for the higher repayments when your interest rate reverts to your lenders standard rate.

5. Pay your priority debts first

If you don’t pay your mortgage you could lose your home and as such it is a priority debt. A debt adviser can help you plan your budget and if necessary restructure your finances in order to pay your priority debts first.  It is always good practice to keep a record of all your outgoings and review them regularly so that you are aware of where you can rearrange your finances in order to always have enough money for your mortgage. 

6. Pay what you can each month

As soon as you know that you cannot afford to pay the full amount of your mortgage every month, contacting your lender as soon as possible means they will allow you to pay what you can afford.  The lenders are aware that people sometimes have financial issues and are used to dealing with them!

7. Open all your post

Never ignore letters or telephone calls from your lender.  If you are not sure what they mean ask your lender, the mortgage adviser who arranged your mortgage or a debt adviser.  If you are the tenant of a property, open all mail that is addressed ‘to the occupier’.  This is how the mortgage lender will contact you if the landlord has a payment problem.  

8. Don’t panic about repossession proceedings

Always attend the court hearings yourself. Court proceedings do not mean that you will automatically lose your home. The court process acts as a final check to make sure repossession is the last resort. Some courts have advice desks which can provide last minute assistance. 

9. Don’t abandon your property

If you are struggling with mortgage repayments you may be tempted to send the keys to your lender or abandon your property. Don’t do this without getting the right advice! You could still be responsible for the debt on the property and may be pursued for it years later.  

10. Get independent advice about Mortgage Rescue Schemes

Selling your home and renting it back might seem like a quick fix to your debt problems. But many of these schemes offer very little security. They are also not regulated so you will not have access to the same protections as a mortgage holder.  

For more information on mortgage payment problems:

• Citizens Advice – http://www.adviceguide.org.uk/
• Consumer Credit Counselling Service (CCCS) - http://www.cccs.co.uk/
• National Debtline - http://www.nationaldebtline.co.uk/
• Payplan - http://www.payplan.com/
• Shelter - http://www.shelter.org.uk/
• The Financial Services Authority - The industry regulator has a series of practical guides on managing money and financial products on their website: http://www.moneymadeclear.fsa.gov.uk/

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