For most people, getting a mortgage will be the biggest financial commitment they'll ever make. Unfortunately that can leave a lot of borrowers struggling – figures from the Financial Ombudsman Service (FOS) have revealed not only a record number of mortgage complaints, but also that an increasing number of complainants have let the situation get out of hand before seeking help.
Last year, a record 13,659 people contacted the FOS for help with a mortgage or secured loan problem, however a third of those had already slipped into arrears before they sought advice. Four in ten complaints came from those who were struggling with repayments, however an increasing number were unable to admit that they were facing problems or were concerned what impact it would have if they told their lender.
This "debt denial" means a lot of people are leaving things too late before they get help, and with repossession being a very real possibility for those in serious difficulty, far too many are putting their home at risk.
"Mortgages are the most significant purchase most of us will make in our lives, so we understand why people might be reluctant to say that they're struggling to pay for their home," said chief ombudsman Tony Boorman. "Many of the cases where people face losing their home have been heart-breaking to deal with – but could potentially have been avoided. So if money is tight, you should never be afraid to ask for help or guidance. Speak up sooner rather than later; there's a lot that can be done to help before things get out of hand."
The key, then, is to talk to your lender as soon as you're feeling over-stretched, because the sooner advice is sought the more likely it is that any issues can be rectified. Lenders are expected to help borrowers that are in financial difficulty, with the FOS actually calling on them to do more and take a less "black and white" approach.
However, try not to overestimate how much help your lender can provide. It emerged that a lot of borrowers have wildly unrealistic expectations, which perhaps explains why the FOS only upheld 30% of mortgage complaints last year – on many occasions customers sought the likes of suspended payments, halting interest, and in some cases they expected the debt to be written off altogether.
Of course, in these types of scenarios it isn't always possible to get what you want. The FOS could well feel that your complaint isn't valid if you're seeking something wholly unrealistic, so while you should always complain if you're not happy with how your lender has treated you, the key thing to remember is that you want to try to rectify the situation before things get out of hand.
Hopefully, the tighter affordability checks following the Mortgage Market Review should make things a little easier. Lenders will have to make absolutely certain that you can afford the repayments both now and when rates start to rise, which will ideally lead to fewer payment difficulties in the future. Of course, another great way to prevent falling behind on your payments is to make sure you've got an affordable mortgage in the first place, and although rates are slowly edging up there are still plenty of deals that can be found.
So, if you're struggling with your mortgage, don't suffer in silence – make sure to contact your lender as soon as possible to discuss the situation and see what route can be taken, and hopefully you won't have any cause for complaint.
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