Options for borrowers with financial difficulties or mortgage arrears
We aim to treat all borrowers with financial difficulties or mortgage arrears in a sympathetic and positive manner. There follows a summary of the alternative payment options offered:
1 Change the payment due date.
2 Change repayment method.
3 Enter into an arrangement to repay the arrears over a reasonable period.
4 Accept reduced repayments.
5 Accept payments of interest only (including payments from the Department of Work & Pensions - formerly DSS).
6 Extend the mortgage term.
7 Change the repayment type (Capital & Interest to Interest only).
8 Conversion to permanent Interest Only.
9 Payment holiday.
10 Capitalisation of the arrears.
11 Sale of the property whilst you remain in residence.
Please see below details for the terms and conditions applying to each of the above options. If you have any queries in respect of the options then please refer to the covering letter for the person to contact.
General Terms:
Before entering into an arrangement, a concession or capitalisation of the arrears, we will ask you to complete an Income and Expenditure form in order that we may assess whether we feel you are able to afford the proposed solution. We may also require you to supply recent payslips/bank statements.
If your financial difficulties are of a permanent nature then we will refer you to a Qualified Mortgage Adviser who will interview you, either in person or by telephone, and will seek to arrange an affordable long-term payment plan.
We do not make arrears charges providing you keep to any arrangement entered into. If you do not keep to any arrangement, and do not keep us informed of your circumstances, then we reserve the right to levy charges for arrears letters and telephone calls.
1 Repayment dates:
Full monthly repayments are due from the month following completion, on the date stated on the Offer of Advance. You may change this date to suit your finances so long as payments reach us by the last day of the month.
2 Payments may be made by:
1 Change the payment due date.
2 Change repayment method.
3 Enter into an arrangement to repay the arrears over a reasonable period.
4 Accept reduced repayments.
5 Accept payments of interest only (including payments from the Department of Work & Pensions - formerly DSS).
6 Extend the mortgage term.
7 Change the repayment type (Capital & Interest to Interest only).
8 Conversion to permanent Interest Only.
9 Payment holiday.
10 Capitalisation of the arrears.
11 Sale of the property whilst you remain in residence.
Please see below details for the terms and conditions applying to each of the above options. If you have any queries in respect of the options then please refer to the covering letter for the person to contact.
General Terms:
Before entering into an arrangement, a concession or capitalisation of the arrears, we will ask you to complete an Income and Expenditure form in order that we may assess whether we feel you are able to afford the proposed solution. We may also require you to supply recent payslips/bank statements.
If your financial difficulties are of a permanent nature then we will refer you to a Qualified Mortgage Adviser who will interview you, either in person or by telephone, and will seek to arrange an affordable long-term payment plan.
We do not make arrears charges providing you keep to any arrangement entered into. If you do not keep to any arrangement, and do not keep us informed of your circumstances, then we reserve the right to levy charges for arrears letters and telephone calls.
1 Repayment dates:
Full monthly repayments are due from the month following completion, on the date stated on the Offer of Advance. You may change this date to suit your finances so long as payments reach us by the last day of the month.
2 Payments may be made by:
- Direct Debit - we offer three Direct Debit collection dates: 1st, 15th and 27th.
To make payments by direct debit you will need to complete an instruction, click here to download a direct debit form or telephone 01538 392434 to request one. - Standing Order - to make payments by standing order, please contact your bank - please ensure that your bank quotes your account number (LUBS bank details are given below).
- Online - via our bank, HSBC, quoting our bank sort code 40-28-01 and account number 11012258. It is essential that you also quote your mortgage account number. This method enables you to pay at any time of the day. If your bank is in the 'Faster Payments' scheme, your payment will normally be credited to your mortgage account as at the day your bank accepted the transaction.
- Debit or Credit card - this method is intended to enable you to make quick one-off payments by telephone (01538 392434).
- Internal transfer from a Leek United investment account - please telephone 01538 384151 and ask for a form to complete.
- Cheque - you can either send the cheque to the address below or pay this in at any of our branches or agents.
- Cash - for security reasons it is recommended that cash payments be made only at our local branch office/agency.
Address: 50 St Edward Street, Leek, Staffordshire. ST13 5DL
Our bank details: HSBC, Leek, Account number: 11012258. Sort Code: 40-28-01
3 Arrangement to make additional payment to clear arrears:
If you are unable to pay the arrears in full immediately but are able to increase your repayments, then we will consider entering into an arrangement to clear the arrears over a period, which suits your finances. Typically this will be over a period of 12 months or less, although we are able to consider a longer period if necessary.
You should complete the Income and Expenditure form enclosed with this information sheet and then consider what surplus income you have before making your proposal. If having entered into an arrangement you find that you cannot afford the repayments, then please contact us immediately and we will look at the alternative options available to you.
You are at liberty to seek independent advice from a free debt advice agency (click here for list of agencies) before making a proposal. Please inform us immediately if you are using this option and we will allow 10 working days for your to make and attend an appointment.
We will confirm in writing, within 10 working days, the details of any arrangement for concession entered into.
4 Reduced payment:
If your income has temporarily reduced and you wish to make reduced payments, then we will consider entering into a short-term arrangement, typically over a period of 3 months. We will review your circumstances again at the end of the 3 month period and consider whether to extend this facility.
5 Interest only payments:
If your income has permanently reduced or if your circumstances dictate that you need to make minimum monthly repayments, then we will consider accepting payments of interest only.
When your circumstances return to normal, you will be invited to confirm how you wish the deferred payments of capital to be treated and given a choice of using any of the alternative options outlined in this policy to catch up or you may elect to capitalise the shortfall (see 10 below).
If you are already paying by interest only and cannot afford your repayments then you should contact a free debt advice agency (click here for list of agencies) for independent advice. They may recommend that you seek to sell the property (see 11 below).
The maximum interest concession period is 3 months after which we will review your circumstances again and consider whether to extend the concession period.
If it is unlikely that your circumstances will improve in the near future, then we will refer you to one of our Qualified Mortgage Advisers to discuss a long-term solution.
6 Changing the mortgage term:
If your income has permanently reduced and whilst you can afford to make payments but not at the current level then you may wish to consider a term extension (capital and interest loans only). This will effectively reduce your monthly repayments. You may be required to speak to one of our Qualified Mortgage Advisors before proceeding with this option.
Extending the mortgage term will result in the mortgage balance reducing at a slower rate and in the long term you will pay back more interest.
The mortgage term must normally not exceed your retirement date unless you have adequate pension income to afford the mortgage repayments.
A fee is payable for this service but this may be added to the mortgage balance.
7 Changing the mortgage repayment type:
You may request a change of repayment type from 'capital and interest' to 'interest only'.
You will need to consider how you will ultimately repay the mortgage, as the capital element of the loan will not reduce. Typically the loan will need to be repaid either by selling the property or, if you die within the mortgage term, by using the proceeds of your estate.
If you require any advice in respect of this option, then please contact us or one of the free debt advice agencies for independent advice (click here for details of agencies).
Before considering this particular option, you may request an illustration from us. We may require you to sign an acceptance form before we process the changes to your account.
A fee will be payable, however this may be added to your mortgage (please refer to our 'Mortgage Fees & Charges' leaflet - to view click here.
8 Permanent interst only:
If your financial circumstances are such that the for foreseeable future you will not be able to afford 'capital and interest' repayments, then we may transfer your acount to 'permanent interest only' (see 7 above - Changing the mortgage repayment type).
9 Payment holiday:
A 'payment holiday' will normally only be automatically granted on a loan where the mortgage product provides such a facility and then subject to the terms and conditions of the product.
If you request a 'payment holiday' but are not eligible, then an 'interest only' concession may be considered as an alternative (see 5 above).
If you are not able to afford 'interest only' payments, then we will consider a 'payment holiday' over a period of 1 or 2 months subject to a review of your circumstances at the end of this period or, if earlier, when your income returns to normal.
If it becomes evident that the reduction in your income is long-term, then you will be referred to one of our Qualified Mortgage Advisers or to a free debt advice agency (click here for list of agencies) to see a long-term solution.
10 Capitalising arrears:
If you are able to maintain standard mortgage repayments but are not in a financial position to discharge any outstanding arrears or shortfall in payments, then providing future payments are made within the month that they fall due, for a period of 6 months, we will consider capitalising the arrears/shortfall.
Under this option the arrears/shortfall will be added to your loan to be repaid back over the remaining term of the mortgage. Interest will accrue on the total balance outstanding on the mortgage including the arrears/shortfall at the standard rate for the account. The monthly repayments will be recalculated over the remaining term of the loan.
This option may be combined with extending the mortgage term if your circumstances dictate that you need to maintain your repayments at the same level (see 6 above).
Arrears will normally only be capitalised a maximum of 3 times during the life of a mortgage after which you will be referred to a Qualified Mortgage Advisor to seek a more permanent solution.
11. Voluntary Sales Scheme:
If there appears to be no long-term solution to your financial problems, then you may need to consider selling the property to repay the mortgage.
We will seek to help you remain in your home whilst you attempt to sell the property by accepting reduced or deferred payments according to your individual financial circumstances and the past conduct of the account.
The use of this option is subject to an initial deferred payment period of 3 months, thereafter a monthly review. The loan to value ratio (LTV) of your property must normally not exceed 75% at any time during the concession (if the LTV exceeds 75%, then as an alterantive you may be asked to make 'interest only' payments).
You will need to demonstrate that you are taking all reasonable steps to actively market the property by providing, within a period of 10 working days:-
If you are unable to pay the arrears in full immediately but are able to increase your repayments, then we will consider entering into an arrangement to clear the arrears over a period, which suits your finances. Typically this will be over a period of 12 months or less, although we are able to consider a longer period if necessary.
You should complete the Income and Expenditure form enclosed with this information sheet and then consider what surplus income you have before making your proposal. If having entered into an arrangement you find that you cannot afford the repayments, then please contact us immediately and we will look at the alternative options available to you.
You are at liberty to seek independent advice from a free debt advice agency (click here for list of agencies) before making a proposal. Please inform us immediately if you are using this option and we will allow 10 working days for your to make and attend an appointment.
We will confirm in writing, within 10 working days, the details of any arrangement for concession entered into.
4 Reduced payment:
If your income has temporarily reduced and you wish to make reduced payments, then we will consider entering into a short-term arrangement, typically over a period of 3 months. We will review your circumstances again at the end of the 3 month period and consider whether to extend this facility.
5 Interest only payments:
If your income has permanently reduced or if your circumstances dictate that you need to make minimum monthly repayments, then we will consider accepting payments of interest only.
When your circumstances return to normal, you will be invited to confirm how you wish the deferred payments of capital to be treated and given a choice of using any of the alternative options outlined in this policy to catch up or you may elect to capitalise the shortfall (see 10 below).
If you are already paying by interest only and cannot afford your repayments then you should contact a free debt advice agency (click here for list of agencies) for independent advice. They may recommend that you seek to sell the property (see 11 below).
The maximum interest concession period is 3 months after which we will review your circumstances again and consider whether to extend the concession period.
If it is unlikely that your circumstances will improve in the near future, then we will refer you to one of our Qualified Mortgage Advisers to discuss a long-term solution.
6 Changing the mortgage term:
If your income has permanently reduced and whilst you can afford to make payments but not at the current level then you may wish to consider a term extension (capital and interest loans only). This will effectively reduce your monthly repayments. You may be required to speak to one of our Qualified Mortgage Advisors before proceeding with this option.
Extending the mortgage term will result in the mortgage balance reducing at a slower rate and in the long term you will pay back more interest.
The mortgage term must normally not exceed your retirement date unless you have adequate pension income to afford the mortgage repayments.
A fee is payable for this service but this may be added to the mortgage balance.
7 Changing the mortgage repayment type:
You may request a change of repayment type from 'capital and interest' to 'interest only'.
You will need to consider how you will ultimately repay the mortgage, as the capital element of the loan will not reduce. Typically the loan will need to be repaid either by selling the property or, if you die within the mortgage term, by using the proceeds of your estate.
If you require any advice in respect of this option, then please contact us or one of the free debt advice agencies for independent advice (click here for details of agencies).
Before considering this particular option, you may request an illustration from us. We may require you to sign an acceptance form before we process the changes to your account.
A fee will be payable, however this may be added to your mortgage (please refer to our 'Mortgage Fees & Charges' leaflet - to view click here.
8 Permanent interst only:
If your financial circumstances are such that the for foreseeable future you will not be able to afford 'capital and interest' repayments, then we may transfer your acount to 'permanent interest only' (see 7 above - Changing the mortgage repayment type).
9 Payment holiday:
A 'payment holiday' will normally only be automatically granted on a loan where the mortgage product provides such a facility and then subject to the terms and conditions of the product.
If you request a 'payment holiday' but are not eligible, then an 'interest only' concession may be considered as an alternative (see 5 above).
If you are not able to afford 'interest only' payments, then we will consider a 'payment holiday' over a period of 1 or 2 months subject to a review of your circumstances at the end of this period or, if earlier, when your income returns to normal.
If it becomes evident that the reduction in your income is long-term, then you will be referred to one of our Qualified Mortgage Advisers or to a free debt advice agency (click here for list of agencies) to see a long-term solution.
10 Capitalising arrears:
If you are able to maintain standard mortgage repayments but are not in a financial position to discharge any outstanding arrears or shortfall in payments, then providing future payments are made within the month that they fall due, for a period of 6 months, we will consider capitalising the arrears/shortfall.
Under this option the arrears/shortfall will be added to your loan to be repaid back over the remaining term of the mortgage. Interest will accrue on the total balance outstanding on the mortgage including the arrears/shortfall at the standard rate for the account. The monthly repayments will be recalculated over the remaining term of the loan.
This option may be combined with extending the mortgage term if your circumstances dictate that you need to maintain your repayments at the same level (see 6 above).
Arrears will normally only be capitalised a maximum of 3 times during the life of a mortgage after which you will be referred to a Qualified Mortgage Advisor to seek a more permanent solution.
11. Voluntary Sales Scheme:
If there appears to be no long-term solution to your financial problems, then you may need to consider selling the property to repay the mortgage.
We will seek to help you remain in your home whilst you attempt to sell the property by accepting reduced or deferred payments according to your individual financial circumstances and the past conduct of the account.
The use of this option is subject to an initial deferred payment period of 3 months, thereafter a monthly review. The loan to value ratio (LTV) of your property must normally not exceed 75% at any time during the concession (if the LTV exceeds 75%, then as an alterantive you may be asked to make 'interest only' payments).
You will need to demonstrate that you are taking all reasonable steps to actively market the property by providing, within a period of 10 working days:-
- Details of the estate agent and conveyancer instructed in the sale together with an authority to contact these bodies for information regarding the progress of the sale and the instructions received from you.
- A copy of the particulars of sale and the Home Information Pack.
- Where relevant, details of purchase offers received.
Before proceeding with this option you are recommended to contact a free debt advice agency (click here for list of agencies) to explore any other options.
12. Mortgage Rescue Scheme:
This government scheme is designed to help the most vulnerable homeowners to remain in their home. The mortgage rescue package has two elements:
For further information see the government website:
www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/Mortgagesandrepossessions/index.htm
This government scheme is designed to help the most vulnerable homeowners to remain in their home. The mortgage rescue package has two elements:
- Shared equity: helping householders who have experienced payment shocks and need some help in paying their mortgage
- Government mortgage to rent: helping the most vulnerable households on low incomes with little chance of sustaining a mortgage
For further information see the government website:
www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/Mortgagesandrepossessions/index.htm
