A mortgage is a big undertaking. As mortgage terms are usually at least 20 years, there’s a lot that can change in that time.
Family, jobs, the economy fluctuating - sometimes these changes are not for the best and meeting your mortgage repayments can become harder.
Your mortgage lender can offer a number of solutions to help you with mortgage arrears, including a payment holiday, extending the mortgage term, or switching to an interest-only mortgage.
Keeping up with your mortgage repayments is crucial for keeping your roof over your head. If you’re struggling to meet your repayments, there are steps you can take to protect your home.
This guide looks at what to do if you’ve missed payments and what help is available.
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When you take out a mortgage, you essentially agree that you’ll make monthly repayments to your lender in full and on time. If you’re behind on your mortgage repayments, you’re said to be ‘in arrears’. This is another way of saying that you have mortgage payments overdue.
In the short term, the first thing that will happen is your mortgage lender will get in touch to find out why they haven’t received your payment. From there, they’ll try to collect what you owe in full or work with you to develop a plan where you pay off your arrears in instalments.
They may offer you some different options for meeting your repayments, including:
Missing mortgage repayments can be a big deal long term too. This is because a mortgage is a loan secured against your home, and if you can’t pay, they can take it away. If you cannot meet your repayments, your lender can consider repossession as a last resort.
Missed mortgage repayments also go down on your credit report. A missed payment can be on there for six years and negatively affect your credit score. It’s also something any lender would be able to see when looking whether to approve you for something like a credit card in the future.
It can be really tempting to ignore the problem and hope it goes away. But this isn’t a good idea, especially with the threat of repossession looming. Thankfully, there are a number of steps you can take before it’s likely to get near that point.
Crunching some numbers is the place to start. Look at your income and outgoings, and if there is anywhere, you could cut costs. A mortgage is a high priority debt - it needs to come before any non-essential spending. Citizens Advice has a comprehensive budget calculator, and you may want to consider speaking to a debt advisor before you go any further.
Once you know what you can afford to pay back, it’s time to let your lender know you’re having difficulties. They will usually contact you within 15 days of the payment being missed anyway, but the sooner they know you’re struggling, the sooner you can do something about it.
Explain your situation in full, and they may be able to agree on a temporary solution with you. Remember: they will want to help you meet your repayments - it’s in both of your interests.
Don’t feel like you have to go through this process alone. There are people who can give you advice and support over how to handle your missed payments. If you’re really struggling, charities like StepChange can help you with your debt problems and Shelter can give you support if you’re having housing difficulties.
If missing payments is taking a toll on your mental health, don’t be afraid to speak to a mental health professional or your GP and get the support you need.
If you have mortgage payment protection insurance (MPPI) and are struggling to pay due to sickness or redundancy, reducing your income, use it. This may have been sold to you as part of your mortgage package when you took it out.
You can then look into whether or not you qualify for any government support. You can check if you’re entitled to any benefits with the Government’s benefits calculators. If you do claim benefits, you may also be able to claim help for your mortgage payments too through the Support for Mortgage Interest (SMI) scheme.
This is a loan that only covers the interest on your mortgage and, you do have to repay it, but it can offer some temporary relief.
Talk through your options with a debt counsellor to see what might be available to you. Then you can negotiate things like temporarily reducing monthly repayments, extending mortgage terms or moving payment dates with your lender. Under FCA rules, they have to be fair with you and consider what you’re asking for.
If all other reasonable attempts to resolve the problem haven’t worked and you’re still in arrears, your lender can look into repossessing your home. Repossession is a last resort. Even your lender is likely to prefer cash repayments over taking your home from you.
If you know your financial situation is unlikely to improve, you could consider selling your home yourself before it gets to this point. Downsizing or moving to a cheaper area are options here, and you should ask your lender if you can stay in your home until it sells.
Always make sure you’ve got a safe place to live before you move out - keeping your lender in the loop throughout this process gives you the best chance to land on your feet.
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