What to do if you are worried

If you are having difficulty meeting your mortgage repayments or are worried it may become a problem in the future, here is some information which may help you.

What you should do if you are having trouble paying your mortgage

If you are in this situation there are three steps you should follow:

  1. Tell your lender as soon as possible: your lender will be sympathetic and will provide as much assistance as possible.
  2. Get advice: there are organisations which offer free and independent money advice.
  3. Check the help available to you: your repayments may be covered by an insurance policy or you may be eligible for government benefits or schemes which could help you to stay in your home.

The Money Advice Service website provides advice and information on payment problems and avoiding repossession. Other sources of advice and information are listed at the bottom of this page.

Your first step: tell your lender

If you are having trouble paying your mortgage, or you think it will be a problem in the near future, you should tell your lender immediately. Your lender will be fair and work with you to find a repayment solution.

Some lenders have telephone helplines or debt counselling facilities to assist making contact. The sooner you contact your lender the better, so that action can be taken to deal with the difficulty.

If you can’t afford your full mortgage repayments you should talk to your lender and still pay what you can afford. This shows your lender you are committed to solving the problem and makes it easier for them to help you. There are several options that your lender may be able to consider including:

  • Reducing your monthly payments by lengthening the term of the loan.
  • Moving a repayment mortgage onto an interest-only basis, provided you understand you will not be paying anything off the actual mortgage.
  • Adding arrears to the outstanding mortgage amount rather than seeking immediate payment.
  • Accepting reduced payments for a short period of time until you are able to resume full payments and repay any arrears that build up as a result.
  • Changing the way you make your payments, or the date you make them.

The earlier you make contact, the more options there are available to resolve the problem. However, these are short-term solutions and in the long-term a repayment problem will have to be resolved. Your lender will wish to stay in regular contact with you to keep up to date with any changes in your circumstances.

Each lender has a policy setting out how they will treat borrowers when their mortgage is in arrears. Your lender should provide you with information explaining how you can expect to be treated by them. 

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Your second step: get advice

There are a number of organisations which offer free and independent money advice. Their counsellors can help you assess your financial problems and advise the best course of action to solve them.

If you are worried about approaching your lender direct - or if you have multiple debts – these debt advice agencies can help you. Lenders will work with these agencies if they are acting on your behalf.

Debt advisers can also tell you about the government schemes to help homeowners and help you apply for them. 

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Your third step: check the options and help available to you

If you become unemployed, have an accident, or are too sick to be able to work, you should check whether you have a mortgage payment protection policy. This type of insurance would usually have been taken out at the same time as your mortgage and, if you have an eligible claim, will cover your mortgage repayments up to a period of 12 months or sometimes more.

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Sale and rent-back schemes: exercise caution

Some companies offer to help you if you get into financial difficulties with your mortgage payments by buying your home and then renting it back to you for a fixed period of time (six months or more). These are sometimes called ‘mortgage rescue’, ‘rent-back’ or ‘sell-to-let’ schemes.

More information on these schemes can be found on the Money Advice Service  Before entering a scheme you should contact the FCA to check if a company is registered to make sure you have access to the complaints procedures if things go wrong.

Selling your home in this way may allow you to clear your mortgage debts and stay in your home. However, if you opt for such a scheme you will no longer own your home and could still be evicted if you fall behind with your new rental payments. So think carefully before entering into such a scheme and make sure you understand the consequences. You should consider getting an independent valuation and impartial advice before making a decision. 

There are a number of state benefits and schemes to help homeowners in difficulty. A list of these are below.

 

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Government schemes to help with mortgage arrears  

 

Support for Mortgage Interest (SMI)

If you are a homeowner getting certain income related benefits you might be able to get help towards interest payments on your mortgage or any home improvement loans.

Mortgage Rescue in Scotland

If you are facing possession in Scotland you may be eligible for the mortgage to rent scheme - where the housing association buys your home and you to continue to live there as a tenant.

Mortgage Rescue in Wales

The Welsh Government runs a mortgage rescue scheme operated through local councils and housing associations with the aim of preventing owner-occupiers becoming homeless. Select your local authority to contact them directly.

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