The term “arrears” generally refers to the state of loan repayments with respect to the due date of those repayments. Simply, arrears refers to a late, or overdue, payment. Accounts are in arrears when you have missed one or more payments when scheduled repayments are required by an agreement or contract such as a mortgage loan, rent agreement, car loans, utility bills, etc.
Mortgage Arrears Explained
Specifically, mortgage arrears refers to a situation in which the borrower has not made some or all of their mortgage repayments as is required by their mortgage loan agreement. Essentially, it refers to the situation of missing a mortgage repayment.
Mortgage arrears are not something to ignore or take lightly. They can accumulate over time and have a negative impact on your credit history since it signifies that you have not made repayments for your mortgage loan. Mortgage arrears can lead to the repossession of your home, so it is important to understand what mortgage arrears are and how you can address them.
How to Deal with Mortgage Arrears
- Prioritize your financial commitments. Prioritizing your outstanding debts and establishing your mortgage loan as a priority debt will help in ensuring that those repayments get made each month.
- Create a budget. Budgeting your monthly expenses with your mortgage repayments factored into those calculations can help you avoid mortgage arrears. Following a budget can help you ensure that you have enough money each month to cover your mortgage repayments.
- Check the policy on your mortgage protection insurance. Some mortgage protection insurance policies will provide coverage on mortgage repayments for a given amount of time. Checking your policy to see if such coverage is provided is something to keep in mind.
- Talk with your mortgage lender. Your lender is required by the Central Bank of Ireland to have a Mortgage Arrears Resolution Process (MARP) to help clients who are dealing with mortgage arrears or who are in pre-arrears. Your lender will provide you with a confidential staff member who can outline what your options are.
- Seek out financial advice. Getting advice related to debt and money management is another option. This advice can help you identify the right next steps to address your mortgage arrears situation.
- Repossession? Seek legal advice. If your lender is going to begin the repossession process, you should immediately seek out professional legal advice. These services can help you understand what your options are at that point in the process.