How You Might Get A Mortgage Default
If you have a mortgage default then you’re not alone. In fact, you may be one of the 770,000 plus Brits who miss a payment on their mortgage or credit card at least once a year*. So a mortgage default is not unusual. In fact, there are many reasons why you might end up with a mortgage default . People’s finances do not always remain stable, and they may have difficulty in meeting their mortgage and other payments. Here are some of the situations that might lead to a mortgage default.
One of the key reasons why people may miss a mortgage payment and end up with a mortgage default is that they need to spend the money elsewhere, such as on Christmas presents. The December to January period is one when finances can be stretched to the limit as people try to buy presents and food and have money for entertainment. There’s a feeling that Christmas is to be enjoyed and this often means that people are freer with their spending money, racking up debts on credit cards and store cards. A mortgage default might ensue when they find they can’t repay all their debts after the festivities are over.
Changes in employment might also lead to a mortgage default. With many people on short term contracts, work may not be as steady as the old job for life and finances will fluctuate accordingly. Redundancies have been a feature of the work environment for a couple of decades now and losing a job could easily lead to missed mortgage payments and a mortgage default. Again, this is a common situation, affecting thousands of British consumers each year.
Another reason for a mortgage default is that people may spend the money on something else,like a family occasion that simply can’t be postponed.A wedding is one example of a costly family occasion that may stretch the budget to bursting point and people might also overspend on parties for engagements, christenings or graduations. It can be easy to get finances muddled.
And of course, there’s the ease of getting credit. As recent research has shown, some people are able to get loans even when lenders have no idea whether they can repay them. Sometimes no income checks are done and other important checks are omitted too. This can mean that people can borrow a lot of money which then has to be paid back. When there’s too much debt and too little money, something’s got to give – and it can be the mortgage payment, leading to a mortgage default.
If you think that your finances are heading that way, then it’s best to do something about it straight away. Don’t wait for a mortgage default to take action. Instead, speak to your mortgage lender if you might have difficulty in making payments and get some help to deal with your debt levels. This is the only sensible move so you can plan to avoid a mortgage default and avoid losing your home.
* Source: www.fairinvestment.co.uk – 16/07/2007