What to do if you can't pay your mortgage

What to do if you can't pay your mortgage

If you don't think you'll be able to make your mortgage payment, the first thing to do is contact your lender. It's key to talk to them as soon as possible and make them aware of your situation.

Regardless of whether you're with a major bank or smaller building society, they should be willing and able to offer support. 

Before calling your mortgage lender, think about how much you can afford to pay each month and whether there is likely to be any change to your income in the short term, as these are both questions they're likely to ask. You'll also need to be prepared to discuss your current finances and financial commitments.

In the first instance, your lender might be able to offer one of the following options:

• A temporary mortgage payment holiday: your repayments are paused for a set period of time - but interest will continue being added to your loan, so you'll likely pay more interest in the long run. 
• A temporary switch to interest-only payments: you just pay the interest on your mortgage, without repaying the loan itself, for a set period of time - so you might pay off your entire mortgage later than you planned to. 
• Extending the mortgage term to reduce monthly payments: you can stretch out your mortgage term, from 30 years to 35 years, for example. You'll be paying back the same amount of debt, but over a longer period as your monthly bill will be reduced. 

Lenders have staff who are trained in helping customers with these types of concerns, so don't feel embarrassed to pick up the phone and ask for help. The sooner you contact your lender, the sooner they can offer you support.

• Find out more: how mortgage payments work

What impact does mortgage support have in the long-term?

The options listed above can help in the short-term, but overall, you'll end up having to pay back more on your mortgage as the interest bill continues to grow.

When you can afford to do so, switching back to your normal repayment will help you save money in the long run.

Borrowers who change the length of their repayment term or go on to interest-only plans can now reverse their decision within six months without it impacting their credit rating.

What happens if you miss a mortgage payment?

If you've missed a mortgage payment, your lender will usually write to you and inform you of the situation. Rather than waiting for the letter, be proactive and contact your provider to discuss the issue.

When you miss payments, this is called going into 'arrears'. Mortgage arrears is a priority debt, and if you consistently fail to repay your mortgage your home could be repossessed. 

Missed payments will also show on your credit report and could affect your ability to take out credit in the future.

Ways to pay off your mortgage arrears

If you've missed one payment but are able to catch up with your repayments from the following month, your lender may allow you to add a bit more onto your upcoming payments until you've cleared the debt.

For example, if you've missed a £700 payment, you may be able to add an extra £100 to your monthly payments for the next seven months.

Alternatively, your provider may allow you to add your arrears to the total amount you owe and pay them back over the lifetime of the loan. This is called 'capitalising your arrears'. 

While it might seem like a more straightforward option, you'll be increasing your debt and paying more interest in the long run, so consider taking independent advice on your options before agreeing to such a measure.

Will my home be repossessed if I miss mortgage payments?

Repossessing a property is a last resort for mortgage lenders after other avenues have been exhausted.

Before taking this step, your bank must consider any requests you make to change the way you pay your mortgage and work to find a solution with you. 

It must write to you five working days before it starts court action and explain why it is applying to court.

Lenders could previously start repossession orders after three months of arrears, however, the UK's major providers agreed in June 2023 to extend this to 12 months.

You can find out more about how the repossession process works in England, Wales and Northern Ireland and Scotland.

Government support for people with mortgage arrears

Benefits claimants in England may be able to get help through the government's Support for Mortgage Interest (SMI) loan, which covers some of the interest on their mortgage. 

To qualify, you will need to be in receipt of one of the following: Income Support, Jobseeker’s Allowance, Employment and Support Allowance, Universal Credit or Pension Credit.

The SMI loan is repayable when you sell the property. You can find out more at Gov.uk. You can also seek advice on your options from your local council.

Homeowners in Scotland struggling with their payments may be eligible for the Home Owners' Support Fund. Measures can include the government buying a stake of your property to reduce your mortgage payments.

Some local authorities in Wales provide mortgage rescue schemes that can help struggling homeowners avoid repossession.

Housing Rights Northern Ireland provides a support line for people concerned about their mortgage payments.

Where to get free debt advice

If you're struggling with debt, it can be helpful to take independent advice on your options.

Free advice is available from a number of sources, including the following:

• Citizens Advice
• National Debtline
• Shelter

Find out more: free debt advice contacts