Job loss and being unable to make mortgage repayments: what to do
What happens if you’re unable to make a repayment on your mortgage after losing your job? Well, MO is here to help! Mortgages.Online has all the info you need on mortgage repayments!
Losing your job is never a pleasant experience. While we’re sure you know this, and won’t patronise you with it, it can place a lot of emotional and financial stress on a person. Though tough, it’s important to realise that it is not the end of the world.
It’s just as important to know that there are solutions and ways to work out problems that your job loss has presented. Organisation and drive are going to be key. So, gear up. This article is going to help settle your anxieties over unemployment and how to handle keeping up with monthly repayments on your mortgage.
List your ‘debts’ and mortgage repayments
An easy way of getting to grips with your financial woes is knowing exactly what you are supposed to be tackling. That means it’s time to hit the problem head-on. You can start this by listing the debts and commitments you have, even those ones you’ve tried to slide under the carpet. This can take the form of lots of different types that you may or may not have forgotten. For example:
- Car loan
- Mortgage Repayments
- Council Tax
- Credit Card Bills
- Payment plans for objects you’ve previously bought
- Gas, Water, and Electric Bills
All of these are going to need to be paid at some point sooner or later, so it's time to get organised and know where you’re going to start. Learn to prioritise your debts as well. Redundancy and job loss can see you go from a situation where you were successfully managing your debts without too much hassle to being in a situation where you’re seeking help from all angles. Therefore, it will be vital to be clear on which of these debts will need to be prioritised, so you can tackle them as soon as you have the means.
Working out what your priority and non-priority debts are:
While it may be that certain debts such as mortgages repayments, rent, and utility bills are going to be the absolute priority, you can never be too sure. The best way to deal with this will be by reading over the terms of any contracts you’ve signed.
This may mean looking at the amount owed per debt, who it is owed to and the consequences if the specific debt is not paid within a certain period of time. Failure to pay some of these debts may mean that you have some of your possessions reclaimed, be evicted from your home or have your home utilities cut off. So, it will be key to look at this as soon as possible.
Ascertain your budget
There isn’t one single formula for ascertaining your budget. Having said that, making sure it is done systematically and is well organised will be vital to tackling any repayment problems. A budget, after all, is essentially just a list of your income spending. So, time to get ruthless and be honest. If you feel like you have any things that are outstanding, it’s time to assess whether you need to be spending money on them.
This could mean that it’s time for you to cut back. We’re sure this will be more difficult for some than it will be for others, try your best to reduce expenditure. One way this can be made easier is by deciding which outgoings are deemed essential and non-essential.
Working out what’s essential and non-essential
Essentials are normally easier to decipher. This can include looking at utility bills such as water, gas, and electrics. However, just because they’re essentials, does it mean that you can’t save money on them? Of course, it doesn’t! Did you know that if you have your heating turned down by one degree for the whole year it can save up to £55 per year? It’s always important to revise how you’re spending your money so you can work out what the best ways to save are.
Non-essentials can be more difficult to interpret. This can take the form of that gym membership you don’t really use or that overpriced coffee you buy every Monday morning. Your ‘ruthlessness’ is going to be key to solving your unemployment problems, so don’t hold back! Cutting out smaller, non-essential expenses like a monthly magazine subscription or a weekly takeaway can hold a lot of weight when solving your debt woes.
We recommend that you put them in order of priority until you have a list of expenses that work within your budget. Or, if you’re finding it hard to go cold turkey on one specific thing, don’t worry. In this case, it may be advisable that you cut back by a small amount on everything until you are in your budget.
Look at any potential claims on insurance
Mortgage repayment protection, payment protection insurance or short-term income protection insurance you might have previously taken out can be a great stop-gap for any sudden financial difficulty.
Previously, due to the way that payment protection policies were ordained, there was a possibility that you may not realise that you have this cover. Though you should have no such worries as this is a thing of the past! Make sure you ask your lender whether any loan you have taken out or outstanding repayment commitment is covered by insurance. It is also possible that if your claim is refused then you may have been misled when the policy was sold. Thus, meaning that you could claim compensation. So, make sure you keep an out for this!
So, for those who have lost their job, and are unsure of your future, speak to your lender. Make sure that they understand your situation and keep them informed. Prioritise your debts and start your job search!
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