Debt & Your Home


Debt & Your Home

Will a Trust Deed or a DAS protect my home?

Unlike solutions such as sequestration, Trust Deeds and DAS’ offer the great advantage that, as long as you do not fall behind on your mortgage, you will be able to keep your home.

However, it can be requested for you to release equity from your property to help pay back your debts. This is dependent on the value of your property and does mean you may be paying a mortgage for longer. However, it means you’re not at risk of losing your home.

I rent my home, will it be affected?

If you’re a renter, most debt solutions will not affect your tenancy. You also are not required to notify your landlord if you enter into one.

Furthermore, although most debt solutions are noted on your credit file, they should not affect your ability to rent a new property. In these instances, it is likely that you may be required to pay a higher deposit, have a guarantor or pay your rent in cash each month as a form of security.

If you are in arrears to your rent, this may not be able to be included in some debt solutions, particularly if it is your current tenancy. Generally, you are given an allowance with your budget to pay your rent along with the arrears, reducing the chances of eviction.

The only exception to this is if you are to enter a sequestration as many rental agreements contain a clause that renders this a breach.

I’m in arrears with my mortgage, what can I do?

Falling behind on your mortgage payments can lead to serious consequences. However, most mortgage providers will explore many options before looking at repossession, especially if it is going to work out as a loss for them.

All providers are regulated by the Financial Conduct Authority (FCA), who’s job is to make sure consumers are treated equally and fairly. As such, if you feel you are being treated unfairly, they have the power to step in.

It’s always best to keep your mortgage provider in the loop with your situation. If they know what’s going on, the more likely they are to work with you and help you pay back your arrears in a way that suits you.

What can I do if I’m not in a debt solution?

If you are not in a debt solution, there is the option to use any available equity in your home to help clear your debts.

This is normally done by taking out a second mortgage, either with your current provider or switching to a different one, also known as an equity release.

Equity can be released to you in one larger payment, or several smaller ones. It often comes with a lower interest rate than your other debts, giving you the opportunity to save more money long-term.

However, the loan is secured against your property, so it still has the potential for you to lose your home if you struggle to make the recalculated mortgage payments. If you are thinking of going down this route, it’s important to make sure you have all the relevant information in order to make a reasonable decision.

My home is worth less than my mortgage, what does this mean?

This is referred to as negative equity, a common occurrence in the everchanging property market.

If selling your home is not in your immediate plans, negative equity might not necessarily be in your list of worries. However, it can leave you with a shortfall when you do decide to sell.

Our best advice is to speak to estate agents and obtain multiple valuations to help you to know how much of a shortfall you will have.

Your home may not be in negative equity forever, it is possible for the market to change and the value of your home to increase. There is also the option to try and pay more towards your mortgage beforehand (if you can afford to) to reduce the shortfall amount if you then decide to sell.

I’ve received a notice of repossession, what should I do?

If you have received a notice of repossession, it’s very important to follow any instruction that it entails. Call your provider and discuss your situation; repossession is normally their last resource to recover the money you owe, so they may still be willing to work with you.

If the notice includes a court date, it is vital that you attend. Understandably, this cause you stress, but attending the court hearing can give you the chance to offer a payment plan with your provider.

If you are struggling financially and are worried about your home, contact us today. Our friendly advisors are always on hand to offer free and confidential advice to help you find the best way to deal with your debts.

You could write off up to 75% of unsecured debt with our debt assistant.

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