Life can throw unexpected challenges that disrupt even the best-laid financial plans. When signing a mortgage, we typically anticipate being able to meet the payments, perhaps even ahead of schedule.

However, unforeseen events like a pandemic, job loss, or other hardships can make it difficult to keep up with regular mortgage payments.

If you’re struggling to afford your mortgage, it’s crucial to explore your options thoroughly. This can be an anxious time, but understanding the steps you can take may alleviate some of the stress.

What to Do If You Can’t Pay Your Mortgage

Contact Your Lender Promptly Don’t ignore the issue. Reach out to your lender as soon as you realize you might miss a payment. Open communication can often lead to solutions such as:

• Forbearance: This allows you to temporarily defer payments, though missed payments will add to your overall debt.
• Refinancing: If you have good credit, refinancing can lower your monthly payments by reducing the interest rate or extending the loan term.
• New Repayment Plan: Lenders may extend the mortgage term or offer an interest-only payment plan to make payments more manageable.

What Happens If You’re Late on a Payment?

Missing a payment can damage your credit score and incur penalty fees. It’s vital to inform your lender immediately if you foresee a late payment or have missed one by accident. While you may still face fees, transparency can sometimes lead to leniency.

Seeking Help and Advice

Consider consulting a HUD-approved housing counsellor for guidance tailored to your situation. Debt-focused charities like Citizens Advice Bureau, National Debt line, and Step Change can also offer support.

Government Assistance Programs

Programs like Support for Mortgage Interest (SMI) can help if you receive certain benefits, such as Income Support or Pension Credit. In Scotland, the Home Owners’ Support Fund (HOSF) is available for those struggling with mortgage payments.

Using a Credit Card to Pay Your Mortgage

Most mortgage providers don’t accept credit card payments. Even if they do, such payments are usually treated as cash advances, attracting high-interest rates. This can quickly escalate your debt, making it an unadvisable long-term solution.

Paying Back Mortgage Debt

If you fall into arrears, options include making extra payments when possible, adding the owed amount to your mortgage principal, or extending your mortgage term. Consider borrowing money or using insurance policies to raise necessary funds but consult a financial advisor first.

If you can’t catch up on payments, your lender might seek a court’s possession order to sell your home. However, lenders must provide at least two weeks’ notice before doing so.

Conclusion

Managing mortgage payments during tough times is challenging, but resources and strategies are available to help you navigate these difficulties. Stay informed, proactive, and seek advice tailored to your circumstances to maintain financial stability.