Remortgaging With Arrears

To be in arrears on a mortgage relates to a missed mortgage payment, or an accumulation of missed payments. The actual term 'arrears' is a generic one and can refer to any type of payment arrangement that is made such as a bank loan, life assurance policy, or even a monthly council tax payment.

The reasons behind falling into arrears will of course differ from one person to the next. In most situations, missed payments can be put down to such factors as poor financial planning, being sick from work, being made redundant and having an accident preventing the individual from work.

Many individuals fall into arrears on some form of payment arrangement throughout their lifetime, whether this is a missed mortgage payment or another form of payment arrangement. Falling into arrears on the mortgage is generally considered to be the most serious of issues as this can ultimately lead to property repossession should the problem be left to spiral out of control.

Being in arrears on a mortgage or any loan secured against a property is a very big problem. There are a number of options open to both borrowers and lenders when an account is in arrears. The best advice given to any individual who has missed a payment on a mortgage or secured loan is to contact the lender at the earliest possible opportunity so as to try and avoid the situation getting worse.

Some borrowers decide upon the option of a remortgage in order to clear their arrears and start afresh with a new lender. This is best considered when there are no early repayment fees to pay to switch to a new lender. The advantages of remortgaging in this way are that any outstanding arrears are simply capitalized by utilizing the equity in the property. If there is any impending court intervention, then by switching to a new lender can avoid this course of action - and the subsequent fees and charges that can be applied.
Many of these unnecessary fees and charges are best avoided at a time when the borrower in arrears can least afford it.

In recent months it has become more difficult to find a lender who will be prepared to consider lending to a borrower with a large amount of arrears present. This is largely down to responsible lending which every major lender in the United Kingdom promotes. In recent times it was possible to find many specialist lenders who would consider an application regardless of how many payments had been missed on account. It is still possible to remortgage in this way however few lenders will do it and the rates applicable tend to be very high.