How does debt affect my home?

A house is one of the biggest and important purchases you’ll make in your life, and for most people making sure you keep it is at the top of the priority list.

But when dealing with your debts becomes a struggle, keeping your home can become very hard. Not only that but it can become at risk of being taken from you if you’re not careful.

All is not lost though, as there are many ways you can protect your home from this risk. Many of the debt solutions mentioned on this site actually offer you this protection – no matter whether you rent, pay a mortgage or fully own your home.

As such, we’ve created this guide to explain how debt can affect your home and what you can do to protect it.

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Debt and renting

With the prices of houses ever-rising, more and more people are turning to rented homes. For the most part, your debt won’t affect this.

But, if you fall behind on your rent, then you will become at risk of being evicted. Landlords are within their rights to do this and can do so in different ways, depending on the type of tenancy you have.

In order to evict you, landlords will usually need to get a possession order from the court. This normally comes after you have been given written notice.

The possession order will give you 14 days to leave your home. If you do not leave by this date, then your landlord can then apply for a warrant of possession – which allows the bailiffs to come and evict you.

But you can prevent it from reaching this stage. By talking to your landlord and explaining your situation, you may be able to make an arrangement to pay back what you owe.

If you’re really struggling, it’s also worth making sure that you’re getting as much as you’re entitled to, such as any benefits that could boost your income.

For those already getting benefits, it may be a possibility to ask for deductions to be taken from your payments, much like an attachment of earnings. This would help relieve you of the pressure of doing this yourself and allow your balance to be paid back automatically.

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Debt and mortgages

Being behind with your mortgage is one kind of debt everyone wants to avoid. There are serious consequences for not keeping up with your payments and your home will become at serious risk of being repossessed if you don’t act quickly.

It’s important to remember that a lot of the time mortgage companies won’t care about your situation and will simply be looking to get their money. However, most will look at repossession as a last resort, and will only go down this route if it brings them a better return.

The best way to avoid it reaching this level is to speak to your lender. Create a budget to work out how much you can afford to pay back and cut out other expenses where you can.

If you’re struggling, there is also the option of support from the government. Support for Mortgage Interest payments are designed for those who are receiving benefits such as income support or pension credit and is paid directly to your lender. You can find out more about these payments here.

Debt solutions and your home

One of the main attractions of most debt solutions is that they pretty much eliminate the risk of your home being repossessed. As long as you keep up your payments to your plan and don’t breach it in any way, your home will be safe.

But, in some solutions such as an IVA or Trust Deed, you may be asked to release equity from your house. Any money that you do release, will come into your arrangement Sure, this may be stressful and can seem like it’s setting your back mortgage-wise, but it’s worth it in the end to keep your home.

The only exceptions to this are bankruptcy and sequestration. This is simply because the basis of these solutions requires you to give up your home as it is an asset.

If you’re worried about your home being affected by your finances, talk to TAD, our resident debt expert, for further information.