January money woes and mortgage struggles

After the expenditure of Christmas, it can all get a bit tough this time of year. Let me start this blog with a line that I’ve said repeatedly for years and years (this will probably be written on my tombstone in the end!), if you’re struggling to pay your bills – PLEASE speak to your lenders!

Avoid avoiding the post

 “I KNOW I shouldn’t have buried my head in the sand but I just couldn’t face opening the letters”

I might not have had a repossession letter through my door but I really do get this mentality. I help a lot of people with their finances when they’re having property problems – but you know what I hate dealing with most in my own life? You guessed it! I really hate dealing with money stuff. I avoid looking at my account if it’s been a heavy month, I avoid budgeting if I know I have some big expenses (and just hope it works out!).

I’ve really had to train myself to deal with my own issues around money, and although I’m still working on it, one thing I really do know to be true is that it is never better to avoid it and you always feel better after you’ve bitten the bullet and gotten on top of things. Even if it is as bad as you were worried it would be, you’ll still feel better for facing it head-on.

The reason I push so hard for people to get in touch with their lender now is because there has been what I call ‘An evolution of the lender’. It’s happened slowly in the 20 years I’ve been in property, but over the last three years – since Covid, it’s really come along.

The Evolution of Lenders (they’re not as scary as they used to be!)

It used to be that there was NO leeway. You owed money – they chased you!

Things have changed. Lenders have changed.

I think this is because there is so much more understanding now about Mental Health. There’s much more of a ‘we’re in it together’ mentality since so many people struggled financially through the pandemic. Lenders give their staff proper training and they understand that piling more and more fees on top of someone who already can’t pay is not going to get them their money back.

If you’re struggling, call your lender and talk it through. They want to put plans in place to help you to continue paying your debt. They would rather a small amount off your debt each month than nothing at all!

I had a client with addiction issues who had fallen behind on his mortgage. His mental health was declining daily and the situation was spiralling. I called on his behalf and explained the situation. The Lender took immediate action – a 90-day ‘Do Not Contact’ order was placed on his account – no calls, no letters, no rising fees for 90 days allowed him the time needed to get on top of everything.

If you don’t call them, you’re not giving them that opportunity to help, and this is when the lender has no option but to sell the debt to a debt collection agency – and believe me, these haven’t evolved in the same way, sadly.

What to do if you’re struggling to pay your Mortgage

1. OPEN THE MAIL.
   It’s the hardest and scariest step but it has to be the first one. Get a friend to sit with you if you’re feeling anxious about what you might find, it’ll all seem more manageable with someone there who can help give some comfort. Not opening the letters won’t make anything better.
2. COMPLETE AN INCOME & EXPENDITURE FORM.
   As I said above, communication is absolute key – call your Lender as soon as possible if you can’t pay your bills. You will find that one of the things they’ll require is an Income & Expenditure report so they can see where you stand financially. I recommend preparing this ahead of calling if you can, it will avoid you feeling put on the spot, and doing it yourself in your own time means you will avoid missing anything. Just like in option, 1, ask a friend to help if it seems too overwhelming. It doesn’t HAVE to be done before you call, but it’ll show willing and put you in the driving seat
3. CANCEL SKY TV!
   If you want to show your mortgage company that you’re willing to make things work, remove bigger costs from your monthly outgoings that they could flag as ‘luxury’. This might be an expensive TV package, a gym membership, a regular trip to a nail salon or regular gambling costs. If you can exclude these from your monthly costs it will demonstrate that you are willing, and free up some cash for catch up payments.
4. BE REALISTIC.
   Don’t consider offering to pay back £100s per month of a debt if it’s not maintainable. You are setting yourself up to be back in the same spot again in a few months. Settle on a repayment amount that you can maintain. You’d be surprised what the lenders will accept, and you’ll feel so much better about managing things going forward without a huge repayment hanging over your head each month.
5. CALL YOUR MORTGAGE COMPANY.
   I always talk about this. It’s THE most important thing you can do – communicate! But it will all go a lot smoother if you have completed the above steps first. Talk to them, they’ll help if they can, and you WILL feel better for it.

While we’re talking money…I’ve established that dealing with my own finances is my least favourite thing to do in the world (ironically, given that the first thing I do with lots of my clients is to help them get theirs organised!). BUT as much as I dislike budgeting and tracking household and business finances, I love nothing more than saving money! I know, I know – Who doesn’t?! But it’s a bit of a sport for me! 

So let me share my favourite money saving hacks

These are a few of the hacks I use to help save pennies:

1. Top Cashback. If you’re buying online (and who doesn’t these days!), then why not get paid for it? As their website explains: “It’s really simple. Every time you click through and purchase something from one of the 4,000 major retailers featured on TopCashback, the retailer pays us a commission for referring you to their website. We pass 100% of this commission back to you as ‘cashback’.”
   You will be AMAZED at how quickly you can build cashback if you get into the habit of using it for every purchase.
2. I replaced my current account (which I used to pay a fee for!)  with a current account that gives me 1% cash back on almost all purchases I make with my debit card. Barclays, Santander and Chase all offer cashback current accounts.
3. In the same vein…Santander 123 Lite Current Account gives you cashback on your bills – a great one to choose as your joint account for all your household bills.
4. I’ll avoid it as long as possible and grumble all the way through, but I do carry out an income and expenditure budget at least once a year to stay on top of things. It really saves money as I don’t think there’s a single time I’ve done it when it hasn’t prompted me to cancel at least one of my regular payments because I notice I no longer need it, or it needs replacing with a cheaper introductory offer, for example.Feel free to use my Income & Expenditure template.
5. For day-to-day management of my finances, I use the Emma app. I’m not saving money as such, but it makes it all less painful!

*none of the above constitutes financial advice nor am I paid to advertise any products. These are just tools that I have personally found useful.

I hope that advice helps you in some way this January, and I truly wish you all a happy new year.

I’m Joanne. I’ve lived and breathed property for longer than I care to remember! This blog provides advice and support with problems surrounding property, and life in general.

Previously on the blog…