Can the Breathing Space Scheme Be Used for Mortgage Arrears?

At Gaffsy, we understand that homeowners can face unexpected financial challenges, including difficulties with mortgage payments. In this blog, we’ll explore the Breathing Space Scheme and how it can be applied when dealing with mortgage arrears.

We also recognise you may not want to hang around watching your arrears grow and just want to sell my flat fast and secure a guaranteed flat sale. Know that Gaffsy can give you a no-obligation free cash offer today. We buy any house, no matter the condition, regardless of the circumstances.

An Overview of the Breathing Space Scheme

The Breathing Space Scheme, formally known as the Breathing Space Debt Respite Scheme, is a government-backed initiative. It gives legal protection from creditor action for up to 60 days. It is designed to provide individuals with temporary relief from their debts. The scheme offers a lifeline to those facing overwhelming financial burdens. It pauses most enforcement action, contact from creditors, stops repossession and freezes most interest and charges on debts.

It provides time for individuals to evaluate their financial situation and take the necessary steps to address these debts.

Utilising the Breathing Space Scheme for Mortgage Arrears

1. Inclusion of Mortgage Arrears

The good news is that the Breathing Space Scheme can be used to address mortgage arrears. If you are struggling to meet your mortgage payments and have other debts you are eligible to apply for this scheme. Once you are approved your mortgage lender cannot initiate repossession proceedings, demand immediate repayment, or impose additional interest during the defined breathing space period.

2. Meeting Eligibility Criteria

To be eligible for the Breathing Space Scheme, you must meet specific criteria:

• You must be an individual homeowner.
• You need to live in England or Wales.
• Your debts should have reached an unmanageable.
• You must not be in a DRO (debt relief order), IVA (individual voluntary arrangement) or be an undischarged bankrupt; and
• You must not have applied for a breathing space in the past 12 months.
• You need to apply for breathing space through an approved debt advisor.

Seeking Professional Guidance

A crucial step in utilising the Breathing Space Scheme for mortgage arrears is to seek advice from an approved debt advisor.  A debt advisor is able to explore the best strategies for managing your debts, including mortgage arrears. They will advise you of the most suitable debt solution, creating a tailored debt repayment plan and acting as the mediator with creditors.  They will guide you through the process of applying to Breathing Space Scheme or perhaps advise of another more immediate debt solution.

Temporary Relief and Long-term Solutions

It’s essential to recognise that the Breathing Space Scheme offers temporary relief, not a permanent resolution to your mortgage arrears. While it provides a significant pause in creditor actions, you will need to address your mortgage arrears in the long term.

During the breathing space period, it’s crucial to collaborate closely with your debt advisor to explore options for effectively managing your mortgage arrears. This might involve negotiating with your mortgage lender, considering tailored repayment plans, or exploring government support schemes designed to assist homeowners facing financial challenges.

Exploring Additional Support Options

In addition to the Breathing Space debt respite scheme, there are other avenues of support available for homeowners dealing with mortgage arrears:

• Mortgage Payment Holidays: Some mortgage lenders may offer temporary payment holiday’s, this is when you take a break from paying all or part of your monthly mortgage payment. It’s important to check whether you met the eligibility criteria to apply for a payment holiday and that you fully understand the terms and implications of such arrangements. Remember that if you take a payment holiday the mount you owe will go up.

• Government Support Schemes: Depending on your circumstances, you may be eligible for government support schemes like the Support for Mortgage Interest or other government benefits that have been designed to help homeowners facing financial difficulties.

• Mortgage Restructuring: Speak to your mortgage lender following the introduction of  the Mortgage Charter in June this year lenders are open to looking at ways to provide mortgage customers with extra support. You may be able to extend the term of your mortgage, thereby reducing your monthly repayments, if you are on a floating rate deal you may be eligible for a new fix mortgage deal that is more affordable. You may also have the option to making interest only payments for a certain period of time.

What have we learnt about the Breathing Space Scheme for Mortgage Arrears?

So, what is apparent is that the Breathing Space Scheme can indeed be used for addressing mortgage arrear but it does not preclude you from making your usual monthly mortgage repayments.  It does do is give you time to adhere to the advice from a professional debt advisor and begin implementing the debt and arrears repayment plan.  Remember though the scheme does not offer a  long-term solution for mortgage arrears nor does it offer long-term debt respite.

Managing mortgage arrears requires a comprehensive approach tailored to your unique circumstances. Whether through negotiations with your mortgage lender, government support, or customised debt management plans, there are pathways to help you regain control of your finances.

Seeking advice from an approved debt advisor is key they will be in the best position to establish what payments structures need to be implemented, negotiate with your creditors finding an affordable way to pay off your debts. They will be able to assesses your mortgage arrears and determine whether the Breathing Space Scheme is the best option for and guide you through the application process. It may be the scheme is not for you and they may suggest selling your property as a more fitting way to pay off your debts, secure financial stability and live more affordably.  

At Gaffsy, we can assist you to sell flat with mortgage arrears or sell house with mortgage arrears. We are a cash house buyer which means we offer the fastest option to sell your house fast, no matter the location, the condition or its status, the property experts at Gaffsy are happy to help. Contact our team today for a no obligation free cash offer and you could have your house sold and the mortgage arrears cleared in just seven days!