No matter whether you own your own property, or rent from friends, family or a private landlord it’s likely that a large chunk of your monthly income goes towards rent or mortgage payments. Rent or mortgage payments are probably the most important bill that you’ll be responsible for each month. Unlike phone contracts, TV subscriptions or eating out, your rent or mortgage payment is vital as it means keeping a roof over your head.
Even though it’s clear that rent and mortgage payments should be a top priority each month, a recent survey by prepaid card provider icount found that many Brits are still struggling to meet the cost of these payments.
Take a look at what the survey found out about rent and mortgage arrears in the UK in the infographic below:
Impact of rent and mortgage arrears
Rent and mortgage arrears can have a wide reaching impact on individuals who are struggling to meet their monthly payments. Many of the effects caused by rent and mortgage arrears may leave individuals further in debt, or in a tough cycle of financial difficulty. Take a look at some of the effects that falling behind on payments can have below.
Poor credit score
Falling into arrears on a mortgage will leave a negative mark on an individual’s credit score. This will lower their score and leave them less able to access credit such as loans, mortgages or even phone contracts in the future. Any credit they can access will be at a higher interest rate, which may mean they struggle to make repayments in future.
Increasing high-interest debt
As seen in the infographic, many people turn to credit cards when they fall short on their monthly rent or mortgage payments. This high interest debt can quickly snowball, and leave individuals who are already struggling in a crisis situation with their personal finance.
Eviction or repossession
With continued arrears, individuals will be evicted from their properties, or have their homes repossessed to claim back the value of the missed payments. This can leave individuals and families on the streets and struggling to survive.
With the problem of rent and mortgage arrears only looking to increase, it’s important to make sure that lenders and landlords are acting in ethical ways to support those who are struggling.