Can you go to prison for not paying your mortgage?
Many people are concerned that not settling their mortgage could land them behind bars. In almost every case, the response is no. Maybe in trouble with your credit file, but not in jail. Possibly homeless when your house gets repossessed, but not housed at her majesty’s pleasure.
A mortgage is simply a contract to repay the borrower the money you spent to purchase a property. By signing the mortgage agreements, you pledged to return the money by paying them a preset amount in monthly installments and taxes for a particular period of time. As unemployment is on the rise, several people are seeking ways to save money. Since finances are tight, it may be tempting to postpone a mortgage payment. But before you do that, make sure that you read the contract.
For the vast majority of regular debts, one cannot be imprisoned for failing to pay. Overdrafts, credit cards, loans, catalogues, mortgage or rent arrears, utility arrears, and hire purchase debts as listed by StepChange Debt Charity. While those who are unable to make debt payments will not incur prison time, there are a few consequences to missing such installments. It’s important to contact your creditor as soon as you realise you’re having trouble with your payment, as they may assist you in devising an alternate payment plan that would be less costly than just not paying and rejecting their calls and ignoring messages.
You may go to prison for refusing to follow a court order if your creditor chooses to take you to court or if you intentionally conduct mortgage or debt fraud. Mortgage fraud occurs when you purposefully purchase a house where you will reside with the aid of a buy to rent mortgage. It is not unlawful to live in a house with a buy to let mortgage. Yet, you will be perpetrating mortgage fraud if you live in your buy-to-let property for which you got a mortgage by deceiving about the property’s status as an investment. If you say that you are going to rent it out, then you must rent it out. If you say that you are going to live there, then live there.
Follow the rules of a contract and you can’t get in trouble for doing so.
