Having Trouble Paying Your Mortgage?

Having Trouble Paying Your Mortgage?
by Joseph Kenny

Taking out a mortgage or a debt consolidation loan, should not be taken lightly. If you rent a home, you are a tenant, if you do not pay your rent., the landlord can evict you. If you own your own home, the company who holds the mortgage or loan can also evict you if you fail to make the payments. The big difference is of course that if you rent, and you are evicted you just have to find another place to rent.

If you are a homeowner, the consequences can be far more severe. You could loose your deposit that you originally put down on the house. As well as the lot of the equity that you have built up and a large part of any improvements like a new kitchen or extension that you have paid for.

Once you start down the repossession road with a mortgage holder that has a lien on your home. It can be incredibly difficult and expensive to avoid an impending repossession order. The best way to deal with this kind of circumstance is to not get yourself into that position in the first place. You need to stick to your agreement with the when the as best as you possibly can.

When taking out a mortgage or a debt consolidation loan you must seriously consider if you can afford the monthly repayments. You must not only consider if you can afford the payments now, but also, if the payments go up because of interest rate rises, will you still be able to pay what is owed each month?

A good mortgage broker will be able to calculate how much you will have to pay if the mortgage interest rate goes up by a certain amount. It is very important that you don't assume the mortgage payment will always be the same, in these difficult financial times. It is quite possible for your mortgage payments to increase considerably.

For example, if your income were £1000 per month, and you took out a mortgage that cost £500 per month. You will probably struggle to make those payments. When you took out your mortgage you wisely decided that £300 per month was what you could afford. Nevertheless, what happens if interest rates increase over two years, and raise your mortgage payments to £400 a month. Can you still make that payment comfortably? Or will it prove too much to handle? This is what can happen with mortgage payments, that is why you need your broker to calculate what the mortgage could possibly go up too, that way you can decide still be able for your monthly payments.

If you get into difficulties do not bury in your head in the sand, you must take action as soon as you feel you are getting into difficulty. There are some options available that could get you out of difficulty. You may consider changing your home loan to a different type of mortgage that may be more suitable for your changed circumstances.

An interest only mortgage can be a great to help you out for a long period of time. Perhaps several years, while your circumstances change. Interest only mortgages are considerably less expensive per month than regular mortgages.

Of course, you are not paying off any of the money that you owe, on the other hand, you are holding on to your home and everything that you put into it financially and otherwise. A few years from now the rates may go down and you may have a promotion at work that allows you to again convert back to a regular type of mortgage.

Another option is to take out a pension mortgage; this is similar to an interest only mortgage. Except when the mortgage reaches its end, the amount that is still owed can be paid off using part of your pension contributions. You should keep in mind that your employer probably contributes a significant amount to your pension, so will be in effect, helping to pay off your mortgage.

A very similar interest-free mortgage system is the endowment mortgage. Like the pension mortgage, you pay only interest on your mortgage, then at the end of the mortgage term. Your endowment, life insurance will pay off the money that is still owed the mortgage company.

These can be good options should you find yourself in financial difficulties and are having problems paying any kind of monthly mortgage. However, as stated earlier you must not wait until the bailiffs are knocking at the door. As soon as you think, you are having problems contact a qualified online broker, who can help you with quality advice as to the best way to deal with your mortgage problems.

+ Endowment Mortgage