MORE than 700,000 homeowners are struggling with mortgage repayments – but there is help available.
According to government figures, one in 10 borrowers admit they've found it difficult to keep up with their payments over the past year.
The main reasons given were reduced pay due to furlough, working fewer hours, unemployment and an increase in other bills.
The number of struggling households at the end of the year has remained the same since last June and July, according to the latest Household Resilience Study.
Yet the report, which was released this week, comes almost a month after the mortgage holiday scheme closed to new applicants, after being extended several times to help homeowners during the coronavirus crisis.
Below we explain how to get help with your mortgage costs if you're still struggling.
What mortgage help is available for homeowners?
If you're struggling to pay your mortgage, your lender has to offer you personalised support, depending on your individual circumstances.
This applies if your payment holiday is coming to an end too, if you're still in financial difficulty. Below we explain some of your options.
Before you apply for help, keep in mind the "tailored" support will be reported to credit referencing agencies, unlike previous payment holidays.
This means it could affect your ability to get credit in the future.
Make no payments for a temporary period
Speak to your lender and they may be able to offer you another payment holiday for a fixed amount of time as a short-term measure.
This could be handy if, for example, you're unemployed but are set to start a new job in a few months.
Just keep in mind a payment holiday means your repayments will be higher when you start paying again, given the period of non-payments.
You'll also continue to rack up interest on your debt.
Make reduced payments for a temporary period
If you can make some payments towards your mortgage, but not the full amount, your lender may agree to reduce your payments for a short period.
This is also likely to be a short-term solution only.
Do not reduce your payments without speaking to your lender first as this could seriously damage your credit file.
Change your mortgage term to make payments lower
To make the payments more affordable, your lender may offer to change your mortgage term.
This will mean you pay less each month, but keep in mind you'll be in debt longer and you'll end up paying more in interest over the long-term.
How to apply for help
Your mortgage is a priority debt, which means the consequences of non-payment are more serious than other debts.
If you're struggling, it's important to contact your mortgage lender as soon as possible and apply for help.
You'll find the contact details on their respective websites, but keep in mind response times may be slower due to Covid.
Also make sure you don't cancel your regular payments without speaking to your lender first.
If you've already fallen behind on repayments
Your lender shouldn't start repossession action unless all attempts to resolve the situation have failed, according to the financial regulator.
However, if you can't agree a repayment plan, your lender may look to start court action to repossess your home as a last resort.
They'll need to consider if it's appropriate at this time, especially if you're vulnerable due to Covid, said the Financial Conduct Authority.
If you can't come to an agreement with your lender, and you're in financial difficulty, make sure you seek independent debt advice for free.
Below are a few options and their contact numbers.
- National Debtline – 0808 808 4000
- StepChange – 0800 138 1111
- Citizens Advice – 0808 800 9060
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