If you are at this stage you have buried your head for long enough. The demand letters just keep on arriving daily and you are now on first term names with the guys and girls at the mortgage, loan and credit card collection departments.
What ever you do don’t stop paying your mortgage. Talk to your lender at the first signs of any financial problems you may have. Often these problems are caused through debt, illness, accident or redundancy. If you do not pay your mortgage lender each month they will take you to court for not paying them and they can have you evicted and they will repossess your home. If you keep paying your mortgage your lender cannot throw you out of your home. If you genuinely cannot make a full payment then ask your lender if you could switch your mortgage from a repayment to an interest only mortgage. This normally has the effect of reducing your monthly payments. It just depends how much of your monthly repayment is interest and how much is capital repayment.
Alternative if you are young enough you could ask your lender to increase your mortgage term to the maximum period allowed to ensure your mortgage is paid by the time you are 65 years old. Either of the above mentioned methods of reduction will cut you a bit of slack while you rearrange your finances. You should look at returning your finances to their original situation as soon as your finances improve. Always take advice from a professional mortgage broker or your lender
Under no circumstances should you take out any further loans or draw money off your credit card to pay your monthly mortgage, loans and credit card payments. New statistics suggest that a million people in the United Kingdom today are using their credit cards to help supplement their monthly mortgage and living expenses. The cost of borrowing on loans and credit cards is the most expensive money you can borrow and it will only make your situation worse.
If you find yourself struggling financially you must contact a Debt Management company or a charity run debt help organisation like CCCS or contact Citizedns Advice. My personal preference is the charity run Debt help organisations as they don’t charge you any upfront fees or any ongoing monthly fees. This means that all the money you pay to your creditors goes to reducing your debts. With the privately run Debt Management companies they charge huge fees upfront and an ongoing monthly fee. Its important that you don’t get yourself further into debt just trying to get out of debt
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