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Mortgage arrears or problems paying your mortgage

If you’re struggling with your mortgage repayments and can’t get back on track – or are worried about losing your home, the temptation may be to ignore the problem. Don’t. Here is what you can do and where you can find help.

Step 1 – Contact your lender

Your mortgage lender will be keen to help and will talk through your options.

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They must make reasonable attempts to reach an agreement with you, including considering whether to change the way you make payments and when you make them.

If you fall into arrears within 15 days, your lender must:

  • tell you the total sum of your arrears
  • list all the payments which you have missed
  • tell you the exact amount outstanding under your mortgage
  • give you a reasonable time to make good any shortfall in payments
  • give you a reasonable time to make good any shortfall in payments
  • tell you the amount of any charges incurred because of missing any payments

Furthermore, your lender must not seek repossession unless all other reasonable attempts to resolve the situation have failed, and they must give you reasonable notice before taking that action.

What you might agree on

Offer to pay what you can

Offer to pay back what you can afford when you discuss your options with your lender – continuing to pay back some money is better than paying nothing and will help reduce your arrears.

Depending on your circumstances your lender might also make suggestions for you, for example extending your mortgage term.

You might be surprised how simple it is to come to an arrangement to reduce your monthly repayments.

Don’t delay – get in touch with your lender as soon as possible.

Step 2 – Check if you have insurance cover

Mortgage Payment Protection Insurance, also called Accident, Sickness and Unemployment insurance, can help with your mortgage repayments if your income has fallen because of redundancy, accident or sickness.

You might have taken it out when you got your mortgage – look through your mortgage paperwork and double check with your lender or the broker who you used when you took out the mortgage.

Step 3 – Take action to cut your costs

Use our Budget planner to get a clear picture of your income and expenditure.

Spending some time considering your spending habits will help you see if you can save money anywhere.

To help see where you can save cash, have a look at your outgoings in relation to what you have coming in then divide spending into essential and non-essential items.

Cutting back spending on non-essentials

Budgeting is essential if you’re struggling to meet outgoings. Here are just a couple of ways to cut back:

  • Look at the Direct Debits that go out of your account each month – things like gym membership and magazine subscriptions. Now think about whether you’re getting value for money out of all of them. If not, cancel them.
  • Try listing the smaller non-essential items you buy each day – take-away coffees or drinks after work. Put them in order of priority. Pick off the lower priority items first and cut them out one at a time.

Follow the links below to get more money saving tips.

Cutting back spending on essentials

For things like food and energy bills – try shopping around to get a better deal elsewhere.

However, think carefully before you cut back on insurance, especially life insurance.

Ask yourself whether spending a small amount on the premium is better than the risk of not having a pay-out should you die or paying thousands of pounds of your own money if anything were to happen to your home.

Step 4 – Speak to a free debt counselling service

As well as speaking to your lender take advice from one of the many free debt advice charities and organisations.

A trained money adviser from an independent agency, like Citizens Advice or Shelter, can give you free and impartial advice.

There are other charities that can help you talk through your situation and provide information on where to find solutions.

Step 5 – Check if you can get help with your mortgage payments

Use a benefit calculator on the GOV.UK website to find out what you might be entitled to.

Depending on your circumstances you might be eligible for certain benefits – and/or for government help towards your interest payments.

Check out Turn2Us, a charitable service that helps people access welfare benefits, grants and other support.

Worried about being repossessed?

If you’re worried that you might lose your home as a result of lapsed repayments, charities can provide support and advice, and there is plenty of help elsewhere too.

Your local council might also be able to offer support and advice.

Selling your home as a last resort

If you know that your situation won’t change in the long term, think about selling your home yourself and renting or moving to a cheaper property.

If considering this option, ask your lender if you can stay in your property until you sell it and check if it offers help through an Assisted Voluntary Sale scheme.

But make sure you have a place to live before you move out. If you keep your lender up to date and do everything you can to sell it, they should give you good time to sell.

Depending on your property, you might also want to check whether you can sell your home to your council or a social landlord and stay there as tenant.

Find contact details for your local council on the GOV.UK website.

Things to avoid

Speak to a free debt advice service before resorting to any of these options.

  • Taking out an additional loan to pay your debts – these loans can be very expensive and are often secured on your home, so putting it at greater risk. Mortgage offers that promise to help you avoid repossession might also put you at greater risk.
  • Handing back the keys – you’ll still be responsible for the mortgage repayments before your home is sold, and possibly the outstanding balance if the money raised by selling your home isn’t enough to pay off what you owe.
  • Selling your home without having a place to live – your local council might not help you find a place to live if they think you’ve made yourself intentionally homeless.
  • Sale-and-rent-back schemes – this is where you sell your home to a company and rent it back from them. The Financial Conduct Authority has stopped several of these schemes from operation because they treated customers unfairly. Avoid these schemes if at all possible, or, if tempted, talk to a debt counselling service first.

This article is provided by the Money Advice Service.

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