How to Get Help with Your Mortgage
Get in touch with your lender to see if they'll extend your mortgage term. There's also potential help from insurance and the government.
If you’re struggling to pay your mortgage, help is available from a variety of sources. They include your mortgage provider and insurer, as well as financial advisers, mortgage brokers, debt charities and even the government.
The more information you can provide about your financial situation and the reasons you can no longer afford your mortgage payments, the easier it will be to get help. Go through your spending and identify any savings that can be made and try to work out how much you could afford to repay each month before seeking assistance.
If you still need help, here are some options.
Contact your lender first
You should always contact your mortgage provider first to see what it can do to help you. It may agree to extend your mortgage term, which would reduce your monthly repayments. The trade-off is that by spreading your payments over a longer period of time you might end up paying more interest in total.
Alternatively, if your existing deal period has ended, you may be eligible to remortgage to a cheaper deal.
Your lender may also help you reduce your payments by allowing you to switch to interest-only payments for a period of time instead of paying both capital and interest on your mortgage.
Check if you’re insured
It’s also a good idea to check whether you have insurance that could help with your mortgage payments in times of difficulty. For example, mortgage payment protection insurance (also called accident, sickness and unemployment insurance) can cover your mortgage repayments in the event you are made redundant, have an accident or fall ill.
These insurance policies are often taken out at the same time as mortgages, so check your paperwork or speak to your mortgage broker to see if you have one.
The main way the government helps homeowners struggling to pay their mortgage is through the Support for Mortgage Interest scheme. It provides a loan to cover interest charges on up to £200,000 of the mortgage, reducing monthly repayments.
The scheme provides help to people out of work or of pension age. Homeowners receiving benefits including universal credit, income support, income-based jobseeker’s allowance and pension credit can all access the loan if they struggle to afford their mortgage payments.
The loan, which comes with a variable rate of interest, is paid to the mortgage lender, and the borrower must repay it out of the equity they have in their property when they sell it or transfer the ownership of it to someone else. However, there are plans to allow homeowners to transfer the loan if they move home. This is expected from early 2021.
Ask the experts
A mortgage broker may be able to help you improve your financial situation and find suitable products to save you money, but you may have to pay for their services.
Laura Whitcombe is a freelance journalist, campaigns consultant and co-author of Money Made Easy 2015/16 published by Harriman House. Read more