If you find yourself in a position where you can't meet your monthly mortgage payments, it's important not to bury your head in the sand. Help is at hand and there are things you can do to get back on track. We share our advice.
For many of us, mortgage repayments make up a significant portion of our regular outgoings. Sometimes meeting this expense can be a struggle, but luckily there are steps you can take to get help if you think you’ll be unable to meet a payment.
As mortgage lenders like to remind us on a regular basis, if you don’t keep up repayments on your mortgage your home could be repossessed – so if you’re experiencing difficulty paying your mortgage, it’s essential to take action. We give you our top tips.
Talk about it
First and foremost, it’s important not to ignore the problem and hope that your lender won’t notice the missed payment. Unfortunately this will only make things worse because if you miss a repayment, your lender will chase this up right away. At best, your credit rating will be damaged and at worst your lender may start to put repossession proceedings in place.
As such you should contact your lender as soon as you know you will have trouble meeting a repayment. In most cases they will be able to help you cope by offering to defer the payment, allow you to take a payment holiday or even to extend your mortgage term so that your repayments are smaller and more manageable. In any case, letting your lender know about your situation is miles better than simply missing a payment.
Get free advice
Another thing you can do if you're having trouble paying your mortgage is to get advice from a free, independently-based debt charity such as the Citizen’s Advice Bureau, National Debtline, or CCCS (Consumer Credit Counselling Service).
As well as helping you to draw up a budget so that you can figure out how to meet your mortgage payments, they will give you advice on how to talk to your lender about your repayments and the kind of options you have. With any kind of debt, it’s always better to talk about it and come to a sensible solution than to keep silent and let the debt build up further.
Arrange a solution
When you do broach the subject with your lender, it’s possible that they will propose a solution to your mortgage worries such as taking a mortgage payment holiday. However, this is not a step to be taken lightly because interest will still be added to your overall mortgage balance even though you’re not making repayments, meaning your mortgage is likely to work out more expensive in the long run.
That said, it can help those struggling to meet repayments by allowing them to take a break from their mortgage and defer payment to a later date.
Another solution that may be available to you is the government-backed Homeowners Mortgage Support Scheme which can allow you to defer your repayments for up to 2 years if you have recently experienced a sudden drop in income.
However like a mortgage payment holiday this does still mean that you’ll have to pay your deferred instalments back at some point, which will make your mortgage debt larger overall - because interest will still be added to your overall balance in the interim.
Draw up a realistic budget
It’s vital that you look at your finances and draw up a budget that you’ll be able to stick to. It’s a good idea to do this whether you’re finding it hard to meet repayments or not, because it will help you gain control over your money.
Start by looking at your statements and listing all your outgoings and income. This should help you identify areas in which you could rein in your spending and put that spare cash towards meeting your mortgage repayments. If you’re at risk of losing your home it may be necessary to forgo luxuries for a while until your finances are in order again.
Prioritise your debts
After contacting your lender and seeing if there is any help they can offer you, it’s important to take the matter into your own hands too and take a long hard look at any outstanding debt you have. If your mortgage is your only debt then you can simply concentrate on this by putting as much spare money as possible towards meeting a repayment.
However it’s possible you’ll have other debts too such as credit cards, loans, or an overdraft on your current account. In this case, although all these debts may be vying for your attention at once, it’s a good idea to put your mortgage repayments at the top of your list.
While credit card or loan debt can be intimidating, particularly when creditors are chasing you up daily, it’s more important that you have a roof over your head. As such your mortgage is likely to be your highest-priority debt.
This isn’t to say that you should ignore your other debts, as doing this will have undesirable consequences too. Instead you should put your mortgage at the top of your list but make sure you are doing everything you can to meet the demands of your lower-priority debts as well.
Continue to pay
As much as is possible in your current circumstances, it’s advisable to at least keep up a minimum level of repayment – even if it's not quite the level originally agreed with your lender. Of course this will have to be discussed with your lender so that they know how much you can pay and are aware that you are having difficulty meeting your payments.
This shows your lender that you are at least trying to meet repayments and have good intentions, which may make them behave more leniently towards you.
Struggling with several different financial obligations can be tough, but keeping up at least a notional amount on your mortgage to show you are still committed to paying is likely to be more beneficial than simply hoping the problem will go away.
The most important thing of all is to keep a clear head and remember not to panic. By addressing the issue head-on you'll be able to find a solution, rather than allowing the problem to get worse by ignoring it.
