Most homeowners in Manchester will never imagine that they’ll miss their mortgage payments, although sometimes an illness or family emergency can cause financial struggle, especially for those with minimal savings and low-income.
It is even more difficult for those who don’t have an insurance policy that would cover their mortgage payments in such a possible event or outcome.
So, we are here to answer the following questions: what should you do if you think you will miss a mortgage payment and how can you recover afterwards?
If you think you’re going to miss an upcoming mortgage payment, the first thing to do is inform your lender. As soon as you miss a payment, this gets instantly marked on your credit record, which could later affect your ability to get a mortgage/remortgage in the future.
Your lender is required to offer support and guidance to borrowers going through a difficult time. Depending on your circumstances and your lender’s criteria, there may be options available that can help you avoid missing a payment.
The most important thing is that you don’t miss the payment because your credit record gets impacted immediately.
Don’t worry about feeling embarrassed, you are not alone—many people will be in the same or worse situation, you won’t be the first or the last who has contacted a lender about this scenario.
If you don’t manage to sort out an alternative arrangement in time and cancel your direct debit or allow your payment to bounce due to lack of funds, your lender may take several attempts to retrieve the money. Depending on the lender, there could usually be several attempts and maybe a period for one missed payment, but you could be hit with a late payment fee, hence impacting your score. Therefore, your ability to get accepted for a mortgage and the amount that you can borrow in the future may be affected.
Once you’ve missed a payment, your lender will want an explanation as to why this had happened.
This will be dependent on the number of missed mortgage payments and also how much time has passed since.
It may still be possible depending on the answers to the above, but it will most likely limit your options and the deals available will typically have higher interest rates.
Ultimately, the recommended option is to protect yourself against missed mortgage payments and to take out income protection insurance that may cover you if you can’t pay. Some think they’ll never need it, but ultimately not having something in place, such as a protection policy or savings to fall back on, can add to what is already a difficult situation.
If you need any additional support or guidance, please speak to one of our Mortgage Protection and Insurance Specialists in Manchester and find out which insurance will benefit you.