Category:
Financial Difficulties
- Interest:
You’ll be charged more interest. This is because your mortgage balance will be higher than expected. The additional interest will increase the amount you owe and reduce the amount of equity you have in your property. - Your credit file:
Each month, we’ll tell credit reference agencies about any arrears on your account. This may make it more difficult or expensive for you to borrow money in the future. You can find more information about how credit file reporting works here. - Fees which may be charged:
If your mortgage goes two or more payments in arrears and you don’t have an agreed payment arrangement in place, we’ll add a £40.00 fee to your mortgage balance each month. This is to cover the extra costs of managing your account when it’s in arrears.
Here’s an example of how much extra it could cost you by having just one arrears fee added to your balance (based on an interest rate of 9.14%). The same principle will apply to other fees that might be added to your balance (such as legal fees or Direct Debit rejection fees).
| Remaining mortgage term | 5 yrs | 10 yrs | 15 yrs |
|---|---|---|---|
| Arrears fee (A) | £40 | £40 | £40 |
| Additional interest over term (B) | £22.59 | £58.71 | £115.66 |
| Total (A + B) | £62.59 | £98.71 | £155.66 |
We won’t charge an arrears fee if you pay your monthly mortgage payment or have an agreed payment arrangement with us. It’s important to get in touch with us if you’re struggling so we can look at ways to support you and help you avoid incurring any arrears fees.