What does “Arrears” mean?

A mortgage borrower is in arrear in the case he/she is either late with their payments towards the lender, or there the payment installments do not correspond with the required monthly amount. A very important aspect when contracting any kind of loan is to keep up with the payments and this also will show a responsible behavior.

Being in arrear can badly affect one’s credit history, which as very well known stands as a criteria for lenders whether to lend money or not. On the other hand, many lenders take advantage of a poor credit history by lending amounts with tremendous interest rates to the borrower.