Topic 28: Arrears and debt management Flashcards
What is Possession?
The lender takes possession of the property from an owner in arrears or default and can then sell it to settle the mortgage. Requires a court order and the lender must follow certain procedures.
What is Rescheduling?
An agreement to settle arrears by making higher payments over an agreed period.
What is Interest-only payments?
An agreement for a repayment mortgage customer who is in mortgage difficulty to make payments of interest only for an agreed period.
What is Capitalising arrears?
Arrears are added to the capital outstanding on the loan and the repayments recalculated. This increases the mortgage debt and monthly payments for the rest of the term.
What is Trading down?
Selling an existing property and buying a cheaper property, as a way to release equity and settle arrears.
What is Mortgage rescue schemes?
Two types of scheme offered by local councils, housing associations and other not-for-profit agencies for borrowers facing mortgage difficulty, whereby the provider buys the property from the borrower and then rents it back to them as a secure tenant; or the borrower sells part of the property to the provider in a shared ownership arrangement.
