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Lender help

Mortgage lenders do want to help people experiencing financial difficulty.

Each mortgage lender will offer different types of help so it is important to contact them directly if you are struggling to pay.

Here are some examples of how your lender may be able to help you.

Interest only

If you have a repayment mortgage you may be able to switch to an interest only mortgage. You only pay the interest on the mortgage which decreases monthly payments helping you afford them. However this should not be seen as a long term solution. An interest only mortgage means you will only ever repay the interest part of the mortgage. You need to ensure you have sufficient money to repay the capital (the original amount borrowed) at the end of the term.

Extending the term

Your lender may increase the number of years left on your mortgage. This will reduce the monthly payment helping you to afford it. You should consider how you will continue to repay the mortgage on an extended term, particularly if this means you will still be paying your mortgage after retirement.

Payment holiday

Your lender may be able to offer you a payment holiday. This means you would be able to have a break from paying your mortgage for a few months. You will have to catch up with these payments before your mortgage ends. It is possible you will still be charged interest in this period which means you will pay back more overall.

Reducing the interest rate

Your lender may reduce your interest rate. This will reduce the monthly payment which may make it easier for you to afford.

Assisted voluntary sale schemes

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

You can only find out what your lender can do for you by contacting them as soon as you think you may be in difficulty.

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FAQs

How do I remortgage?

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.

What is the difference between a repayment and interest only mortgage?

If you have a repayment mortgage, every time you make a payment you pay of some of the capital and the interest. This means that when the mortgage ends you will own your house.

If you have an interest only mortgage, when you make a payment you are only paying the interest and not any of the capital. If you have an interest only mortgage of £100,000 over 20 years, at the end of that 20 years you will still owe £100,000. This is because you will only be paying the interest and not the capital back.

My mortgage lender keeps putting on charges, what should I do?

If you are in arrears with your mortgage or your secured loan, your lender may add monthly charges to your account. The charges they can add to your account will be in the terms and conditions of your mortgage or loan agreement. If you feel that your lender is adding unreasonable charges to your account you should contact the Financial Ombudsman Service.

How will my credit rating be affected by mortgage arrears?

Late or missed payments will show on your credit file for 6 years, as will repossession proceedings. This may make it more difficult to re-mortgage or obtain credit.