Bristol, UK – November 2024 – Private Mortgages, a Bristol-based specialist mortgage broker, has identified a concerning trend: a recent spike in online searches for “missed mortgage payment” could indicate an impending rise in financial strain for UK homeowners.
November sees potentially the highest volume of searches for the term in decades, suggesting that many are worried about the consequences of missing your mortgage payments.
This development comes amid record-high interest rates and inflation, with many households already struggling to meet monthly repayments.
According to data analysis, the surge in search interest over recent months signals that more homeowners may be at risk of falling behind on their mortgages. With the Bank of England maintaining high interest rates to combat inflation, the cost of borrowing has reached levels not seen in over a decade. For many, the financial pinch is becoming unsustainable.
Luther Yeates, Head of Mortgages at Private Mortgages, notes a shift in client preferences as a result. “We’ve seen a significant increase in clients opting for interest-only mortgages or part-and-part arrangements to offset the financial burden of rising rates,” Yeates explains. “Many are also extending their mortgage terms to 30 years or more. While these strategies offer some immediate relief, they may only serve as a temporary fix. Unless rates decrease or incomes rise significantly, it’s only a band aid…”
The high cost of living is pushing an increasing number of people to consider unconventional mortgage options, and many brokers are recommending flexible payment structures.
If you miss a mortgage payment, it can lead to a series of increasingly serious financial and legal consequences, as lenders are obligated to take action to recoup their losses.
Here’s a breakdown of what typically happens if a mortgage payment is missed:
1. Initial Missed Payment Notification
- Timeline: Immediately or within the first 15 days after a missed payment.
- Action: Lenders often send a reminder or courtesy call. At this stage, you may incur a late fee, which could be a fixed amount or a percentage of the missed payment.
- Advice: Contact your lender as soon as possible to discuss options if you’re unable to make the payment on time.
2. Delinquency Reported to Credit Bureaus
- Timeline: After 30 days of non-payment.
- Impact: A missed payment can be reported to credit bureaus, impacting your credit score. Each month of missed payment will add additional “delinquency” marks on your credit report, which may significantly affect your ability to qualify for loans, credit cards, or favourable interest rates in the future.
3. Lender’s Arrears Management Process
- Timeline: Often within the first 60 to 90 days.
- Action: The lender may begin a more formal arrears process, sending letters to notify you of the overdue amount and asking for full repayment. At this stage, lenders may offer payment options or adjustments, like a payment holiday, extending the loan term, or temporarily switching to interest-only payments.
- Advice: It’s crucial to communicate with your lender and explore temporary or alternative repayment options. Many lenders are open to negotiation to avoid escalation.
4. Formal Legal Action and Possession Proceedings
- Timeline: Typically after 90 days of non-payment, but it varies by lender.
- Action: The lender may initiate possession proceedings, a legal process to repossess the property. This usually includes a court hearing where you have an opportunity to defend against repossession if you can demonstrate a feasible plan to make payments.
- Consequences: Repossession results in eviction from the property and can leave you liable for the shortfall if the property sells for less than the remaining mortgage balance.
5. Repossession and Sale of Property
- Outcome: Once repossessed, the property is usually sold at auction, and the proceeds are applied to the remaining mortgage balance. If the sale doesn’t cover the outstanding debt, you may be responsible for the deficit, adding further financial strain.
Options if You’re Struggling to Keep Up
- Interest-Only Payments: Lower monthly payments by paying only the interest for a period.
- Mortgage Term Extension: Extending the loan term can reduce monthly payments.
- Government Schemes: In the UK, options like the Support for Mortgage Interest (SMI) scheme may offer help, although this involves a loan that must eventually be repaid.
Preventive Advice
- Regular Reviews: Regularly reviewing mortgage options with a broker can help you find strategies to minimize financial strain, such as refinancing when conditions are favorable.
- Early Communication with Lenders: Most lenders are open to restructuring options if they’re approached early on.
It’s essential to take missed payments seriously, as addressing the issue promptly can prevent escalation and help you retain control over your financial situation.
For media inquiries, please contact:
Private Mortgages PR Team
Email: contact@privatemortgages.co.uk
Phone: 020 8158 9550