James
There has been a sudden reduction in my family income, thus affecting payment of my mortgage. I called the lender about agreeing a reduced payment for a few months. They agreed but indicated it would affect my credit report and potentially my ability to obtain credit later on. Can you explain the implications of this? What other options do I have? Many thanks,
Ayo, Kent
Ayo
You were right to keep your mortgage lender informed of your drop in income. Far too many people stick their heads in the sand, which only stores up more serious problems for later on. If your lender has agreed to accept lower payments for a while to help you through a difficult period, this could result in your account being marked as being under arrangement and showing arrears on your credit report because the monthly updates they send to the credit reference agencies reflect your contractual payments, which you will technically fall behind on. However, if you are able to catch the arrears up after a few months you will only end up with a minor blip on your repayment history, which hopefully won’t make much difference to future credit applications. Of course, if you find yourself having to make reduced payments for a much longer period, then you need to speak to your lender to discuss other options which are likely to depend on whether you feel you will be able to get back on track in the future. It’s important that you are as open as possible with your mortgage lender and that you keep them regularly informed of your circumstances. And, before you make any important financial decision, you should consider seeking advice from an independent financial adviser. However, if your financial situation significantly worsens, you would be wise to seek advice from a free debt advice agency such as at your local Citizens Advice Bureau, the Consumer Credit Counselling Service or National Debtline. Good luck.
James