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Mortgage arrears. What to do if you can't pay your mortgage

If you’ve missed payments and built up mortgage arrears or secured loan arrears it’s important to act quickly. Not dealing with mortgage debt could result in your home being repossessed.

You need to contact your lender to tell them why you’ve missed payments and arrange to repay the arrears. You’ll also need to negotiate with your lender and agree to pay your normal monthly payment, plus an extra amount towards the arrears.

If you have a court date or you're facing repossession for mortgage arrears get debt advice immediately.

Dealing with mortgage arrears

You should look to repay any mortgage arrears as soon as possible, as your home may be at risk if you don’t.

Create a household budget

The first step to repaying your mortgage arrears is to create a budget. Make sure that you list all of your income and outgoings. Don’t include any unsecured debts, such as personal loans, credit card debt or catalogues.

This is because the consequences of not paying your secured loan or mortgage arrears are more severe than not paying your unsecured debts. Unlike your mortgage, not meeting the payments on unsecured debts doesn’t put your home at risk.

If you've got any money left over, once you’ve covered all of your household bills and living costs, this is the amount you can afford to pay towards your mortgage arrears. If you need help, use our free Debt Remedy tool which can help you create a budget and offers practical advice for your situation.

Contact your mortgage lender

Once you know how much you’ve got left each month you need to contact your lender to arrange repayment. You can also send them a copy of your budget to give them proof of your situation and show them you’re paying as much as you can afford.

Find ways to improve your situation

You may find it useful to look into increasing your income or reducing your expenditure. This might give you extra money to put towards your arrears. You might also be eligible for government mortgage help or be eligible to claim additional benefits that could help improve your situation.

Need help with mortgage arrears or facing repossession?

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Can my mortgage lender repossess my home?

Lenders only start court action to repossess your house as a last resort. If your lender contacts you about your mortgage arrears or secured loan arrears don’t ignore them.

The best thing you can do is speak to your lender. Let them know about your situation and the steps you’re taking to get your payments up to date. If your lender can’t contact you they're more likely to go to court or take further action against you.

Read our advice on what to do if you're facing house reposesssion for more information.

Help from your mortgage lender

If you're struggling with your mortgage payment or arrears, your lender will want to help you. They offer different types of help which is why it's so important to contact them directly as soon as possible. Here are some examples of how they might be able to help.

Interest only

If you’re on a repayment mortgage you may be able to switch to an interest only mortgage. This will reduce your monthly payment as you’ll only be paying the interest on the mortgage, rather than the interest and the capital. This isn’t a long term solution as this type of mortgage means you only ever repay the interest part of the mortgage. You need to make sure that you can repay the capital (the original amount borrowed) at some point before the end of the term.

Extending the term

Depending on your age and the amount of time left on your mortgage your lender might be able to increase the number of years left on your mortgage. This will reduce your monthly payment helping to make it more affordable. You should consider if you’ll be able to continue repaying the mortgage on an extended term, particularly if this means you’ll still be paying your mortgage after retirement.

Payment holiday

Your lender might be able to offer you a payment holiday. This means you’d have a break from paying your mortgage for a few months. You’ll need to catch up with these payments before your mortgage term ends. It’s possible that your lender will still charge interest in this period which means you'll pay back more overall.

Assisted voluntary sale schemes

Your lender may offer an assisted voluntary sale scheme. This means they will give you extra time and help if you decided to sell your property.

Government mortgage help

In some cases you can get government mortgage help to help you with your mortgage payments. This is called Support for Mortgage Interest (SMI) and you can find out more on how the scheme works from Gov.uk.

SMI is normally paid directly to your mortagge lender. The payments will start 13 weeks after you've claimed the benefit. This means if you don't have enough money to pay the first 13 weeks you'll build up mortgage arrears which will need to repaid later.

Free help and advice

We can help you create a budget and work out what you can afford to pay towards your secured loans or mortgage arrears. Call our Helpline (free from all landlines and mobiles) and our expert advisors can give you specialist and tailored advice to help you solve your mortgage problems.

You can also create a tailored budget using our online Debt Remedy tool. This will work out how much you can afford to pay towards your mortgage arrears and how to deal with them.
 

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