As the cost-of-living crisis continues to bite, household finances are being stretched with many struggling to meet the increased costs of essentials and having little or no savings to fall back on. This can lead to some families having problems making monthly mortgage repayments. It is essential for households that find themselves in this situation to have access to the right advice and information.
Rising interest rates are bringing mortgage worries to the fore for many homeowners, but the key thing to remember is you are not alone. If you find yourself in this unfortunate position and canβt pay your mortgage, or think you might struggle to make your payments in the coming months, despite what some people believe, telling your lender you are having problems paying your mortgage does not mean they will start to repossess your home.
Struggling to Pay My Mortgage – what are my options
If youβre finding you can no longer afford your mortgage repayments, there are options that could help you through this difficult time. Weβve provided answers to some typical questions you may have.
Q: What should I do if I think I might be struggling to pay my mortgage and potentially miss a mortgage payment?
A: If youβre worried about missing a mortgage payment, the first thing you should do is contact your lender as soon as possible. They will try to work with you if you are experiencing financial difficulties and offer you help and support. Remember, youβre likely to have more options if you contact your lender before youβve missed a payment.
Q: Will I lose my home?
A: Repossession is always a last resort. Your lender doesnβt want to evict you and will only take this step if there really is no other option β in fact, there are rules in place that mean lenders must attempt every other option available to them before they take legal action. Instead, they will work with you to
try to find a way to make your mortgage repayments affordable.
Q: What are my options if I canβt pay my mortgage?
A: There are three main options if youβre struggling to pay your mortgage and the best option for you will depend on your individual circumstances.
1: Extend the length of your mortgage term. If youβre experiencing financial difficulties, you may be able to extend the length of your mortgage term. Doing so will lower your monthly payments and give you more time to repay your mortgage. You should speak to your lender about this option as soon as possible. Extending your mortgage term will increase the total amount of interest you pay over the life of your loan, so you should only consider this option if youβre certain you canβt afford your current monthly payments.
2: Change to an interest-only mortgage. Changing to an interest-only mortgage can be another way to reduce your monthly payments and give you some breathing room financially. However, there are some things you should keep in mind if youβre considering this option. While an interest-only mortgage will lower your monthly payments, it will also mean that youβll owe more money when the loan term is up. Youβll need to have a plan in place for how you intend to pay off the remaining balance. Switching to an interest-only mortgage may impact your ability to refinance or sell your home in the future. If interest rates rise or property values fall, you could end up owing more than your home is worth. Before making the switch to an interest-only mortgage, bear in mind that this is a big decision that shouldnβt be taken lightly. But if youβre confident that itβs the right move for you, an interest-only mortgage may give you some much-needed financial relief in the short term.
3: Request a payment holiday. If youβre experiencing financial difficulty, lenders will look to see if they are able to offer you a payment holiday, typically up to three months. This will hopefully give you some breathing space to get your finances back on track. If youβre considering taking a mortgage payment holiday, speak to your lender first. Theyβll be able to advise you on the best way to proceed, and will also be able to tell you if there are any fees or charges associated with taking a payment holiday.
Itβs also worth bearing in mind that taking a mortgage payment holiday will extend the term of your mortgage, and so youβll ultimately end up paying more interest over the life of the loan. However, if youβre in a difficult financial situation, a mortgage payment holiday may be the best option for you.
Q: Will it impact my credit score?
A: Taking out a mortgage payment holiday may impact your credit score. But it will depend on a number of factors, including the lender you are with and how they report missed payments to the credit agencies. However, in general, taking a payment holiday is not likely to have a significant impact on your credit score as long as you make up the missed payments as soon as possible. If you do not make up the missed payments, or if you miss multiple payments, then your credit score could be negatively affected. This may make it harder to borrow money over the short term. But there are steps you can take to improve your credit score once you get your finances back on track.
The old adage “It’s good to talk” is really important here. If you are struggling to pay your mortgage,Β do not bury your head in the sand, you should contact your mortgage broker and lender as soon as possible to discuss the options available to you. For further assistance, speak to the team at Yes Mortgage Services Limited β telephone 0800 6125596 β email [email protected].Β We are a whole of market broker who does not charge you a fee and so we would rather talk to you early to help you through this worrying time.
At Yes Mortgage Services, we offer a comprehensive range of products from across the market.
Irrespective of whether you are looking to buy a new home, re-mortgage an existing property, or looking to protect your family from the unpredictability that life throws at it or protect your income if you are unable to work due to accident or ill health.
Yes Mortgage Services are committed to offering you the highest possible standards of service. We can undertake the whole process from answering the initial questions through to handling multiple product applications. Ensuring that everyone gets treated with the same urgency and maintaining your best interests are our main goals irrespective of the value of the mortgage.
We recognise that both we and our customers have everything to gain if we look after your best interests and treat you fairly in all aspect of our dealings with you.
