If you’re struggling to pay your mortgage, we understand that it can be a very worrying time. We want you to have the information you need to make decisions. The most important thing is to know that we are here to help you.

What does ‘arrears’ mean?

If you miss a mortgage payment, your account falls into ‘arrears’. This means that you owe the missed mortgage payment(s). For example, if your mortgage payment is £500 and you don’t pay it, then the amount of the ‘arrears’ will be £500. Or if you only pay half, the ‘arrears’ will be £250.

What to do if you think you might miss a mortgage payment

The first port of call if you are experiencing difficulties paying, is to contact us. Please be reassured that contacting us does not further damage your credit record, and in fact, borrowers who contact us to discuss their situation and make an arrangement to pay, are more likely to recover from credit problems more quickly.

Credit agencies

As a mortgage lender, we supply details about your account, including your payment history and any forbearance provided, to credit reference agencies on a monthly basis. This means that your credit record will be impacted by any missed payments. This may affect your ability to obtain credit in the future.

What we will do

Once our system identifies that your account is in arrears,  we will write to you detailing the  amount of the outstanding arrears on your mortgage.  We will ask you to contact us and similarly, we will try to contact you so we can discuss your individual circumstances to see what support we may be able to offer to help you get back on track.

Depending upon the level of the arrears and your individual circumstances,  we may ask you to complete an Income and Expenditure form so that we can agree a forbearance option with you that you can afford (such as making additional monthly payments to repay the debt, or allowing you to pay less for a while).

Agreeing a forbearance option with us may also help you avoid incurring additional fees and charges.

Fees and charges

If you fail to meet your contractual monthly instalment without an agreed forbearance arrangement in place, a £39.00 monthly arrears fee continues to be added to your mortgage balance. This fee reflects the additional activity and costs incurred to review and manage an account in arrears.

For fee details, please see the our Tariff of Mortgage Fees and Charges, which you can  download by visiting www.foundationhomeloans.co.uk.

Periodically, in accordance with the terms and conditions of your mortgage, your monthly payments may be recalculated to include repaying the fees and charges over the remaining term of your mortgage, for example upon a rate change, or if you request a variation to your mortgage, such as a request to switch the repayment type.

Please be aware, unless or until a recalculation occurs, which may not be for several years (e.g. if you have a current fixed rate) and any arrears are cleared, you will not be making any reduction to the fees and charges part of your mortgage balance.

As mentioned before, we want to help you manage your debt affordably so you don’t incur additional fees and charges. Contacting early before matters get out of hand really helps and remember contacting us does not further affect your credit rating. Please contact us on 0344 770 8030 so we may discuss your individual circumstances and the options that may be available to help you.

How are my repayments used?

All payments received into your mortgage account are used firstly to reduce any arrears you may have to help you return your account back to sustainable terms as soon as possible, followed by the fees and charges balance. As you are paying interest on these outstanding amounts, you will pay more interest overall.     

What does my Outstanding Mortgage Balance include?

The Outstanding Mortgage Balance is made up of two parts - the mortgage debt, and also your ‘Fees and Charges balance’.  These are both included in the outstanding mortgage balance and are incurring interest at your existing mortgage rate.

The fees and charges balance is the fees, charges or expenses incurred, for instance, those included in the Tariff of Mortgage Charges, and any third party costs such as legal costs, ground rent or service charges. In addition, interest on these fees, charges and expenses, plus interest on any arrears is also included.

What happens if we cannot agree a solution?

We will always seek to work with you to find an affordable solution for you to repay your debt. Unfortunately, should we be unable to agree a solution with you, your account may be considered for litigation action which may incur additional fees and charges and impact your credit file. Please be aware that your payment history is shared with Credit Reference Agencies and therefore your credit record will be impacted by any missed payments, which may impact your ability to obtain credit in the future. Ultimately, as a last resort, we may need to seek repossession action to recover the amounts owed to us.

More sources of information

The ‘Cost of living’ zone on this website offers further help and advice and information about ways in which we can help you. More information is available on the Public Services website www.gov.uk.

In addition, if you require additional support, you may find it helpful to contact support agencies that provide free, impartial and independent debt advice. You can find these here. 

If you do not understand this article or any of the documentation you receive, we suggest that you seek advice from your local Citizens Advice Bureau or consult your own legal representative.

Your home may be repossessed if you do not keep up repayments on your mortgage