We’ve broken down the steps you need to follow if you find yourself struggling to meet your mortgage payments.
Finding yourself in the position where you can no longer afford to pay your mortgage isn’t a seat anyone wants to be sat in. But, unfortunately, it happens. The worst thing you can do though, is bury your head in the sand. The earlier you take action, the sooner you can get yourself back on track.
If you’re worried you can’t keep up with your monthly payments, here’s what to do.
1. Get in touch with your lender
First things first, you need to pick up the phone and speak to your lender. Ideally, you should reach out to them before you miss a payment, but if you do miss one, don’t ignore it - speak to them about it straight away.
Missed payments can not only harm your credit history, but, worst case, they could cause your lender to get the wheels in motion for repossession proceedings.
Although every lender will handle the situation differently, if you let them know you’re struggling with your repayments, most will either:
- Let you postpone the payment;
- Offer you a payment holiday; or
- Give you the option to extend your mortgage’s term to reduce your monthly instalments.
It’s in your bank’s best interest to find an agreement that allows you to keep your home - going through the repossession process only takes up their time and resources.
Important: If you’re offered and choose to take a payment holiday, the interest you would have paid on the payments you miss will be added to your mortgage’s remaining balance, which could make it more expensive in the long run.
2. Ask for help
Once you’ve spoken to your mortgage provider and hopefully found a solution that fixes the immediate issue of missing a payment, it’s time to find help for the long-term.
If you’re after a bit of free, impartial and reliable advice, check out organisations like the Citizen’s Advice Bureau, National Debtline and StepChange. As well as providing a friendly ear, they’ll be able to:
Help you put a budget and plan together that helps you to stick to your mortgage payments; and
Offer you advice on how to best approach your lender about your repayment troubles.
3. Look into government schemes
If you’re in seriously hot water and losing your home is a real threat, the government’s Support for Mortgage Interest (SMI) scheme could be able to help you.
It’s not available to everyone though. To qualify, you’ll usually need to be getting one of the below benefits:
- Income Support
- Pension Credit
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
It’s worth noting though, that having these benefits doesn’t automatically guarantee you’ll be accepted.
Another thing to bear in mind is that this scheme doesn’t contribute to the real repayments of your mortgage, though – as the name suggests, it just supports your interest payments. To see if you’re eligible to claim for SMI, get in touch with Jobcentre Plus or the Pension Service.
If you live in Scotland, the equivalent government-backed scheme is called the Home Owners’ Support Fund (HOSF).
4. Rethink your spending
See if there are any areas you can cut back on within your current spending habits. To do this, start off by writing down all your outgoings along with your income. If you notice you’re splashing the cash on items that aren’t totally necessary, cut down and use the money you save to contribute to your mortgage repayments.
For tips on how to budget, check out our dedicated guide on it here.
5. Prioritise what you owe
If the only debt you have to your name is your mortgage, then that makes this one simple enough; just focus on repaying that.
If you have other outstanding debts though, like a credit card, loan or overdraft, see which ones you can temporarily cut back on to focus on your mortgage - after all, you need a roof over your head.
That absolutely doesn’t mean to say you should start missing other repayments and burying your head in the sand with them instead. But, give your credit providers a call, explain your circumstances, and see if there’s anything they can do to help take the pressure off.
If you’re currently paying off £100 of your credit card balance each month, you could consider cutting it back to a more manageable amount - just make sure you think about the effect this’ll have on the interest you pay, though.
Although we hope you never find yourself struggling to meet your mortgage instalments, it’s important to remember you’re not alone. For more news and tips on all things mortgages, head over to our hub on it here.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.