The first step you should take is to contact your lender; especially if you have proven a good financial behavior (meaning that for years you have been paying your rates on time), then there you will definitely find some understanding from his part. It is not that the lender will cut from the total amount you owe, but together you can draw up a plan of payments which would suite you. You should kindly explain the reasons why you cannot continue making your payments with the present rates, and wait for a proposal.

It might happen that the lender will reduce from the interest you owe, or agree upon receiving smaller installments over a longer period of time. For example, if you owe $3,000 in arrears, and you have a usual monthly rate of $200, he might approve that you do pay a monthly $200 for example, from which $100 goes towards the actual rates and the other half towards your debt. Certainly this will totally change the schedule of payments you were used to, it will increase the term of the loan significantly, but if this is the only way so that you can keep your home, than it is a very good solution. It is also important to note that there is also a drawback to having the term of the loan increased: you certainly pay less on a monthly basis, but per total it will be a much greater amount you actually pay back because of the interest.

It is very important that you find a solution which will help you paying both your actual rate for the home you are living in, and an amount towards the debt already created, so that you can reduce from that too. It is very hard indeed to find a way satisfying both of the debts, but eventually there is a way out of it. There is a kind of negative aspect either aspect you would choose, but you should know that there are a handful of options you can take on, and that these will not last forever. The quicker you manage to arrange a good payment schedule with your lender, the better.

Mortgage costs are very high in general, no matter which type of mortgage one chooses, or what the final amount is. Try and make your own financial management, take pen and paper and put down all those things related to your mortgage which cost you a lot of money, like: interest and home insurances (building and contents). These two are aspects on which you can work, in the sense that you can reduce the cost of interest by having your lender agreeing to it; while insurance will cost you less if you find another insurer for example. However small these tactics may seem to you, on the long term there you will observe a difference. Then, having your debt added to the total of the loan, and have your mortgage loan recalculated could be another possibility. For example if you have a debt of $10,000 and your remaining mortgage is still $50,000, if debt is added to the total owed you will have a new debt of $60,000.

Having all your rates recalculated, certainly you will be paying for interest even more per total, but at least you will not having that debt haunting you and you won’t have to take up a new loan in order to be able to repay your mortgage arrears. As seen, possibilities are many; the most important is that you find the perfect solution tailored to your own financial needs.