Mortgage arrears are amongst the hardest debts to deal with. Mortgages by their very definition are loans that are secured on the value of your property. If you fail to make the necessary payments, then the lender is entitled to take the property and sell it in order to settle the debt.

This will result in alternative accommodation having to be found and worse still, the sale of the property may not even cover the debt, leaving you with a shortfall.

Every mortgage provider has its own definition and requirements for mortgage arrears. It is also worth bearing in mind that it does not have to be a mortgage debt that puts a property at risk. Any loan that is secured on a property could result in repossession. For example, a debt consolidation loan that is secured on a property offers a better interest rate, but the danger still exists that the property will be taken if the debt cannot be met.

Be clear about the terms and conditions attached to your loan or mortgage. Some T & Cs, for instance, will allow the lender to repossess the property after only three consecutive months' payments have been missed; others will state that you cannot be late on more than six payments in a year, before you are considered in arrears.

Further issues that may arise from mortgage payments in arrears include not only repossession but also the ongoing implications for your credit rating. Having a mortgage default on your record can seriously damage your credit rating and you may be unable to find a suitable mortgage, in the future. If you are facing the possibility of repossession you can speak to specialist mortgage brokers who may be able to assist with a ‘repossession remortgage’.

Once debtors are in the situation whereby they have extensive arrears, it can prove very difficult to regain ground, as additional payments will have to be made to cover the previous missed payments. For this reason, it is always better to deal with financial difficulty BEFORE an arrears situation actually occurs.

Many mortgage companies offer payment breaks or reductions in payments for a period of time to assist with unforeseen situations. By making this sort of arrangement, your credit rating will not be affected and you will not be at immediate risk of repossession.

A mortgage rescue scheme could offer an immediate solution for someone in financial difficulties, as well as providing a viable way of remaining in your home, long-term. If the financial predicament is merely temporary, it may be possible to negotiate reduced payments with lenders for a few months; however, for those with longer term difficulties a more radical approach may be necessary.

Mortgage rescue schemes are run and managed mainly by local councils and housing associations, although some private lenders also offer a scheme, in certain circumstances. Simply put, a mortgage rescue scheme involves the council, association or lender purchasing your property from you and then allowing you to live in the property in exchange for rent.

Whilst this, of course, means that you are no longer the house owner, it does mean that you are able to pay reduced monthly amounts without having to move home. If the market value of the property is higher than the value of your mortgage, you might even find that you are left with a chunk of equity which can assist to clear other debts you may have.

As well as an outright purchase, many housing associations and councils also offer a shared or part ownership option whereby they purchase a proportion of your property. You then pay a smaller mortgage and a smaller rent amount which, in total, should be less than your current mortgage.

In most schemes, it is possible for the individual to repurchase their property at a later date if their situation improves. Bear in mind, however, that any gain in the value of the property will have to be taken into account.

Typically, the type of people who may be eligible for this scheme include those who have had a large reduction in income (but are, nevertheless, still able to make small monthly payments), those who have minimal mortgage arrears, who need to stay in their current area due to commitments such as school / work, or when the property is in an area where there is a shortage of council accommodation.