Everyone across the UK is facing higher living costs, but with little or no extra money coming in, one of the increasingly scary questions being asked is; What happens if I can’t pay my mortgage?
When you take out a mortgage, it is done with the intention of paying it off bit by bit, but with circumstances changing, many are finding themselves facing financial difficulties and struggling to meet mortgage payments.
If you’re struggling to pay your mortgage or are behind on payments, there are steps you can take to avoid losing your home. In this article, we’re going to explore different ways you can get ahead of these difficult situations as well as advice and resources you can utilise for help with mortgage payments.
Speak to your lender
As soon as you realise you won’t be able to make payments, or are already struggling to keep up with your repayments, the first thing you need to do is speak with your mortgage lender. They will work with you to come up with a new plan to how you can better manage your payment agreement.
Your mortgage lender should be working with you, not against you and should be making every possible attempt to support you in getting things back in order. So don’t worry, just pick up the phone and talk to them. You can even speak to the Citizens Advice Bureau for more guided help.
Your lender will discuss your options with you and may offer suggestions, including:
- Temporary payment arrangements
- Lengthening the term of your mortgage
- Switching temporarily to interest-only repayments
Additionally, if you’re claiming these benefits:
- Income-related Employment and Support Allowance
- Income based Jobseeker’s Allowance
- Universal Credit
- Income Support
- Pension Credit
You might be able to claim help with your mortgage interest payments. This is called Support for Mortgage Interest (SMI) and is offered as a repayable loan.
What if I’ve missed a mortgage payment?
If you’ve already missed one or more payments, this will be reported as a late payment or delinquency, and you will be classed as ‘in mortgage arrears’ which will affect your credit score. Try to avoid missing payments if at all possible and speak to your lender before this situation occurs, but if it’s too late then your lender will be able to help you figure out a plan to pay off the mortgage arrears.
Lenders have to treat you fairly and must consider any request you make to change the way you pay your mortgage. However they can take you to court to repossess your property if you can’t agree on a way to pay back what you owe.
Contact your nearest Citizens Advice immediately if:
- you’ve been told by your lender that they’re applying to court
- you’ve received court papers
- you’re expecting bailiffs
Figure out what you can afford
Before calling your lender, try figuring out exactly how much you can afford to pay for your mortgage. If you already have fallen behind with payments, you’ll need to factor these missed payments into your calculations, but your lender will be able to help you figure out an ongoing plan.
Citizens Advice have a budgeting tool you can use to understand:
- what you’re earning and spending
- where you might be able to cut costs
We know these kinds of tasks can be daunting, but even though you may not like the end result, it’s really important you’re 100% honest when filling in your answers. And remember, it’s better to guess larger than smaller to give yourself a bit of a buffer!
Selling your home to pay your debts
If you can’t afford to carry on paying your mortgage or the arrears and your lender can’t find a suitable plan to help, deciding to sell your home may seem like the only option left. We would strongly advise against this without first seeking financial advice.
Selling may seem like the only option when financial times are hard, but there may be other ways of handling the situation until circumstances improve. You should also be aware that if any difficulties arise when selling your home, you’re still liable for all the costs until it’s sold which can push you further into debt.
Need a chat?
We understand that times are hard right now, and are doing anything and everything we can to support our customers. If you have any questions about your mortgage, or would like to speak to someone about help for mortgage payments, contact us today for a completely confidential conversation.
