Mortgage muddle
Question
I'm a 20 year old student and I bought a house near to my college but in order to do so I had to work to pay the mortgage off. The thing is, I lost the job and now I am running out of money, the bank are threatening to take my house and I just don't know what to do. Can you help me?
Answer
Many homeowners have problems paying their mortgage. If you are having financial problems it's important to act quickly, even if the problems are only temporary. If you don't, you risk losing your home.
A good place to start is to write down your income and outgoings on a personal budget sheet. This will help you work out what payments towards your mortgage and the arrears you can afford to make. When you're doing this it's a good idea to get help from a local money advice agency or National Debtline. They can help you work out which bills and debts are priorities and they may be able to help you identify any outgoings you can reduce. This can help you identify money available to pay the mortgage.
You mention you lost your job and that you're a student. Most full time students are not entitled to claim any benefits, although there are some exceptions, e.g. if you're a single parent. You can get your benefit entitlement checked out by a local benefits adviser, you can see an adviser for free at your local Citizens Advice Bureau.
To increase your income you could consider renting out a room in your home. As a student you may know others who are looking for a room to rent or you could advertise at your college for a tenant. Also, if there's an accommodation office at your college they might be able to suggest people who are looking for a room. If you're renting out a room in your house you may need the permission of your lender. You should check with your lender before signing an agreement with a tenant.
From what you say it's not clear whether your lender has taken any court action against you. Your lender may start possession proceedings against you if your arrears get too high. Possession proceedings are when the lender applies to a county court to repossess your home.
It's important to remember this doesn't mean you will definitely lose your home. If you do receive papers from the court calling you to a court hearing (this is called a summons) it is very important you seek further advice and attend court. An adviser may be able to help you negotiate with your lender to avoid going to court, or help you to argue in court that you should be allowed to stay in the property and pay off the arrears at a certain amount per month.
Even if a possession order has been granted you may be able to prevent eviction. It is always worth seeking advice to see if you can prevent eviction or re-organise your debts.
If your unable to get advice before going to court some local county courts do have an advice scheme based in the court. They are available to people who have not managed to get any advice in advance and may be able to help you deal with the court case in an emergency. You can ask at your county court scheme if they have any advisers who will be on duty but you should bear in mind this is a last resort as it is much more effective to get advice before going to court.
If your financial problems are long-term and not going to improve, you may not want to stay in the property. The lender may allow you to sell the house yourself so you get a better price for it than if it was sold by auction after repossession. Talk to your lender about giving you time to do this and seek money advice about managing this and any other debts you may have. It is not usually a good idea to hand in the keys to your lender.
If your university or college has a welfare office or advice service talk to them. They may be aware of special funds or other forms of help available to students with financial problems.
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Question answered by Shelter
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