What Is An Arrears Remortgage?

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by: James Copper
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Word Count: 502
Date: Fri, 19 Nov 2010 Time: 6:35 AM
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To be in arrears is when a single or multiple payments are missed on a loan or repayment plan. Arrears are brought about of course by many different reasons however in most cases this can be put down to being sick, being made redundant from work or even having an accident preventing you from work.

Having arrears on a mortgage or secured loan is a very serious issue - Missing payments on secured finance can ultimately lead to property repossession. In any case where mortgage or loan repayments start becoming missed it is always advisable to contact the lender at the earliest opportunity - They may be able to assist you in a number of ways.

A mortgage lender has a number of solutions available to them to assist a borrower in arrears. For example they may decide to work out a repayment plan to clear the arrears by way of increasing the monthly payment for a set period of time - However this option is only appropriate where a borrower has the financial means to meet this increased payment. They may also allow the mortgage to be switched from full capital repayment to interest only to reduce the payments. They may also allow you to extend the term of your mortgage, capitalise the arrears or even take a payment holiday! - Any measure available will be very much worked out on a case by case basis.

If you have fallen behind on your monthly mortgage or secured loan repayments then it could make financial sense to shop around for an arrears remortgage deal with another lender. It is often the case that a borrower's mortgage or secured loan repayments jump up after a fixed rate or discounted rate period. This is down to the borrower's interest rate reverting back to the lender's standard variable rate which tends to be a great deal higher than many special offer rates. In this case it could pay dividends to switch mortgage lender to a more competitive product in order to reduce the monthly repayments.

For most borrowers this may offer the best solution to higher repayments; especially if they have fallen behind on their mortgage due to the payments jumping up. However the exception to this option may be found where a borrower is tied in after their fixed or discounted rate for a period of time (Usually one or two years). This is known as having an 'Overhang' penalty and it is this charge that becomes payable if a borrower switches lender during this time.

Wherever there have been arrears on a mortgage it is always the best advice to seek professional help. This help may come in the form of a mortgage adviser or financial adviser specialising in this field. If you are looking to remortgage then it always pays to shop around for the most competitive quote. The internet is a great place to start on your quest for lower repayments.

About the Author

James Copper is a writer for Commercial Finance Specialists.co.uk where you can find information on finding commercial mortgage experts