A mortgage or secured loan (where money is borrowed against your property) is identified by the Citizens Advice Bureau as priority debt. This means falling into arrears can potentially have a serious impact on you.

The term (length of the agreement) of your mortgage will not change. This means you’ll have a higher balance, and your payments will increase as a result.
For example:

• On a £40,000 loan
• With a 6% interest rate,
• 180-month remaining term
• £337.54 monthly payment,

You would pay an extra £3.41 in interest if paying off an arrears balance of £337.54 in 3 months and an extra £11.38 if paying off the arrears balance in 12 months.

While,

• On a £160,000 loan
• With a 4% interest rate,
• 240-month remaining term
• £969.57 monthly payment,

You would pay an extra £6.51 in interest if paying off an arrears balance of £969.57 in 3 months and an extra £21.53 if paying off the arrears balance in 12 months.

Lenders have an obligation to report mortgage and secured loan arrears to credit reference agencies. Therefore, arrears could impact your future borrowing ability or increase the cost of it.

The debt is secured against your home or property. If you are unable to meet your repayments, your property could be taken and sold to clear the outstanding debt. This is always the last resort.

We understand that falling into arrears can be worrying and stressful, but there is support out there.

If you are worried you might fall into arrears or your mortgage is currently in arrears, please contact us as soon as possible. Our friendly team is available on 0333 702 102. Our lines are open from 9 am to 6 pm, Monday to Friday.

During the call, we’ll listen to your situation and work with you to try and find a suitable solution. Alternatively, our existing customer pages are full of great independent resources to help borrowers worried about the impact of falling into arrears. You can find out more here.