A mortgage shortfall occurs when a house is sold and there is not enough money from the sale to pay back the mortgage and any secured loans. For example, if you have a mortgage of £100,000 and sell your house for £95,000 you will have a mortgage shortfall of £5,000. This will become an unsecured loan. Your lender will expect you to come to an arrangement to pay this back.

Repossession is the name for the legal process where a mortgage lender or secured loan provider tries to take possession of a property. If you miss mortgage payments your lender may be able to ask the courts to evict you from your house. Your lender will then sell the property.

If you are worried about your mortgage payments you may be able to remortgage. This could lower your interest rate and your payments. You could speak to your current lender or contact an independent mortgage broker. The mortgage deal you can get will depend on how much equity there is in your property and your credit rating.

Equity is the difference between the value of your house and the value of your mortgage and any secured loans. To work out the amount of equity in your property you will need to know how much your house is worth and how much you have to pay back on any debts secured against it. For example, if your house is worth £100,000 and you have a mortgage of £50,000 and a secured loan of £10,000 you will have £40,000 in equity.

If your house goes down in value so it is worth less than your outstanding mortgage you will be in negative equity. If you sold the house you would not be able to pay the whole mortgage back and would have a mortgage shortfall.