What if you can't pay your mortgage?

Paying the mortgage is an important part of many people’s lives and often dictates the way you live. However, should you find yourself unable to pay your mortgage it is not the end of the world. In this guide we will help you learn which steps to take next in order to help you get back on track. The important thing is not to ignore the problem, and to tackle it head-on as soon as you feel things slipping away.

In This Guide:

• What are the next steps?
• Step 1: Contact your lender
• Step 2: Get help
• Step 3: Organising your payments

Step 1: Contact your lender

Talking to your mortgage lender is the best place to start. They will be keen to help and will walk you through your options. Changes may include the way in which you make payments and how often. They will often allow you to make smaller payments over a longer period of time in order to make it more manageable.

If you have fallen in arrears (have missed your mortgage repayments and have payments overdue) the lender must be reasonable in their demands about repayments.

They 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 reasonable time to make good any shortfall in payments
• tell you the amount of any charges incurred because of missed payments

Step 2: Get help

There is help available to ensure you can tackle problems head-on rather than letter them fester. Debt charities such as National Debtline and Stepchange will be able to give advice on drawing up budgets, how to meet mortgage repayments, and how to talk to your lender about repayments.

Should you find yourself in more desperate need of help, there are government schemes that can help. The Support for Mortgage Interest (SMI) scheme provides help for those on the following state benefits - income support, pension credit, income-based jobseekers allowance, income-related employment and support allowance.

The scheme can help with interest repayments on mortgages or loans you have taken out for home improvements. However, it only pays the interest rather than the capital so you will still need to be able to manage your repayments.

Step 3: Organising your payments

There are two good ways to organise your money to get you back on track with repayments - drawing up a realistic budget and prioritising debts. In order to create a realistic budget, you need to look at your finances and list all your outgoings vs income. This should enable you to see where you can reduce spending and put the saved money into your mortgage fund.

Many people have other debts to look at such as credit cards, loans and overdrafts. However, being safe and secure under a roof is probably the most important thing, and thus your mortgage should be your main priority. Save any cash you can and put it into your mortgage repayments so that you have that security. Of course, don’t ignore your other debts as they won’t magically go away, but your focus should be your mortgage.

A good way to manage all of your debts is through debt management. This is an agreement between you and your creditors to pay off all of your debts. You can arrange a plan with your creditors yourself or through a licensed debt management company for a fee. If you arrange this with a company, you make regular payments to the company and they then share the money out between your creditors.