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The current cost of living crisis is putting a squeeze on everyone’s household budgets. We can give you advice and support to help manage paying your mortgage.
The most important thing is to get help early, before things become unmanageable.
If you are worried you can't pay your mortgage, home loan, or are behind with payments, you should contact your mortgage lender as soon as possible.
Your lender should treat you fairly and advise you what they can do to help you keep your home, with repossession as a last resort.
Your lender would prefer to decide to settle the debt, rather than repossess your property. You must, however, be proactive and engage with them to make an agreement to avoid repossession.
On 26 June 2023, the UK’s largest mortgage lenders and the Financial Conduct Authority (FCA) have agreed with the Chancellor a set of standards that they will adopt when helping their regulated residential mortgage borrowers worried about higher rates.
All lenders have an extensive range of measures that they use for customers experiencing difficulties. They will continue to use these in conjunction with the new measures agreed by the signatories to this Charter:
All lenders have agreed that:
Signatories to this Charter have agreed:
These options can be taken by customers who are up to date with their payments without a new affordability check or affecting their credit score. Customers who are currently in arrears should continue to work with their lender for the support that they need.
In order to resolve any mortgage arrears you could:
By law, the lenders must consider any reasonable suggestions you make to clear your debt before pursuing a repossession from the county courts. They must write an official warning of this legal action before they start it. You will be able to negotiate a solution at this point too.
Keep a record of all the communications you have with your lender, as these will support your case if it does go to court. If you make an agreement, you need to make sure you can afford it as you will lose goodwill if you cannot pay later. Payments should be realistic and reliable so do not over offer but make a financial plan to work out what is affordable to you. We can help you to draft up a budget plan. Contact us if you would like help with this.
If you stop paying your mortgage and make no effort to communicate with your lender, this will harm any case you make against your property being repossessed.
Our cost of living help pages have guidance if you are struggling financially.
The lender may agree to suspend your mortgage arrears so you can sell the property.
To qualify you must:
If negotiations fail, the mortgage lenders can take you to court in a bid to repossess your home.
In court, you will be able to argue the case for one of the solutions above. If you can show evidence of trying to fix your debts and co-operate with your mortgage lender, this will strengthen your case.
A judge will then sanction one of the following outcomes:
The first step is to inform your mortgage lender of your change in circumstances as soon as possible. Together, you can compromise on the most suitable way to repay your debt.
Consider whether you have any payment protection insurance and whether this could help cover the payments whilst you find another job.
Under FCA regulations, your lender will have to consider any reasonable proposals for repaying your debt. Here are some ideas to help you through this rough financial patch.
If you lose your job, you may be entitled to benefits, including:
If your income has dropped, you will probably be entitled to pay less tax and could even be eligible for a tax refund or Tax Credits. Claim these as soon as possible, as they could help ease your mortgage payment problems.
Check if you are entitled to any benefits.
Before April 2018, Support for Mortgage Interest (SMI) was a benefit that did not need to be paid back. It has now become a loan, which means that any SMI loan payments you get must be repaid with interest when you sell or transfer ownership of your home.
SMI loan payments can help towards the outstanding balance on the mortgage and/or other loans secured on your property (up to a limit).
You may qualify for an SMI loan from the Department of Work and Pensions (DWP) if you and/or your partner:
For Universal Credit claimants to qualify for an SMI loan, they must also have no earned income at all.
For working aged people the limit is £200,000. Any mortgage or loan specifically used for adaptations to your property will not count towards the £200,000 if these adaptations are to meet the needs of a disabled person in the household. For pension age people the upper limit is usually £100,000 but there are exceptions.
A standard interest rate is then used to work out the amount you may get. This is currently 2.09% (it was 2.61% between April 2018 and April 2021). For example, if your mortgage balance is £100,000 the maximum SMI Loan payment you could receive would be £100,000 x 2.09% = £2,090 per year or £40.20 per week.
If you have any income coming in or another adult living with you who is not your partner (a non-dependant), this may then be taken into account to reduce the maximum SMI Loan payment you qualify for. The rules are complex, but the benefits calculator will work out how much SMI Loan you may qualify for and display this alongside your benefit entitlements.
Always think very carefully before taking out a second mortgage or securing a loan to help you make ends meet, or bring in extra money.
A secured loan uses your property as security in case you can’t make the repayments on the loan.
You should review your budget to make sure that you can afford anything you commit to. If the interest rates are variable, you should build in that they are likely to rise in the coming months and years to “cushion” yourself.
Contact us and we will do all we can to help you.
We can support you by: