Cutting down your mortgage costs
If you're struggling to pay your mortgage, you must take action quickly to stop yourself from falling into debt.
If you get into debt and your lender thinks you’re not dealing with the problem, they will take action through the courts. This could lead to you losing your home.
On this page, we tell you about some of the things you could do to stop yourself from falling behind with your mortgage payments and getting into debt. These include:
- switching to a cheaper mortgage or insurance deal
- cutting down your monthly payments
- changing payments on your endowment policy
- if you're on a shared ownership scheme, selling back some of the ownership to your property to your landlord.
You should also take a good look at your household budget. Think seriously about whether it's possible to increase the money you've got coming in or make cutbacks on your spending.
For more information about working out your household budget, use our online budgeting tool to help you work out your budget.
For more information about increasing your income or making cutbacks on your spending, see Budgeting.
You may have other options for dealing with your mortgage problems than the ones mentioned on this page. For more information about these, see More options for dealing with mortgage problems.
If you've already fallen into debt with your mortgage payments, there may be things you can do to stop yourself from falling further behind with your payments and to clear the debt. See How to deal with mortgage debts.
If you’re having serious difficulties paying your mortgage, for example, if you’ve started getting letters from your mortgage lender threatening court action, you should get help from an experienced debt adviser.
You can get debt advice from a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
You might also find it helpful to look at What happens if your mortgage lender takes you to court.
You may be able to find a cheaper mortgage deal with another mortgage lender. You may have to pay charges for changing your mortgage lender and you will still have to pay off any money you owe to the first lender if you’re behind with your payments.
You can get more information about switching your mortgage from the Money Advice Service website at www.moneyadviceservice.org.uk.
You might be able to cut down on other costs by switching to cheaper mortgage protection insurance, buildings or contents insurance. You can get information about switching your insurance provider on the Money Advice Service website at www.moneyadviceservice.org.uk.
Checking if you can get help to pay the interest
You might be able to get a government loan if you get:
- Universal Credit
- Pension Credit
- income-based Jobseeker’s Allowance
- income-related Employment and Support Allowance
- Income Support
The loan is called ‘support for mortgage interest’ (SMI). It can help with interest payments on your mortgage. It won’t help you pay off the rest of the mortgage (called the ‘capital’).
You’ll have to pay the SMI loan back, but usually only when you sell your home or give it to someone else. You can find out more about SMI on GOV.UK.
You could ask your mortgage lender if they will agree to cut down your monthly mortgage payments, usually for a limited period of time. This might get you over a rough patch and stop a debt from building up. If a debt has already built up, you’ll need to find a way to clear the debt as well.
For more information about clearing mortgage debts, see How to deal with mortgage debts.
Before you agree to make any changes to your mortgage, you should ask your lender if there will be any charge for this, such as a redemption or administration charge, and how much this will be. If the charge seems very high, you should get advice from an experienced adviser.
Depending on the type of mortgage you have, you may be able to:
- reduce your monthly interest payments. Your lender will probably only agree to this if there is equity in your property. This means that the property must be worth more than how much is owed on the mortgage
- change to interest-only payments
- reduce or stop repayment of the amount you borrowed (the capital) temporarily
- increase the period of time over which the mortgage is paid. This would be more than just a temporary option and would mean you paid more interest in the long term.
For more information about how to ask your mortgage lender to cut down your monthly payments, see Dealing with your mortgage lender.
If you have an endowment mortgage, you could think about either:
- reducing the payments on your endowment policy
- stopping payments into your endowment policy altogether. You will have to make up these payments at a later date.
Making any changes to an endowment policy can be complicated and financially risky. If you’re thinking about doing this, you should get advice from an independent financial adviser first.
For more information about endowment policies, see Mortgages in Buying a home.
Where to find independent financial advice
The following organisations can help you find an independent financial adviser:
Independent Financial Promotions (IFAP)
Institute of Financial Planning (IFP)
Personal Finance Society (PFS)
If you own your property through a shared ownership scheme, you will usually make a monthly payment towards your mortgage and a rent payment to a landlord. This is often a housing association, or some other kind of social landlord.
If you’re having money troubles, you may be able to reduce your mortgage payments by selling back some of your ownership of the property to the landlord.
This is called flexible tenure. Not all shared ownerships schemes offer flexible tenure so you will need to contact your landlord to check if this is available. You will have to show that you've explored all other options first.
There may be other options available to help you sort out your mortgage or rent arrears.
If you have trouble in meeting your mortgage or rent payments or you are already in debt, you should get help straight away from an experienced debt adviser. A Citizens Advice Bureau should be able to help. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
You may have other options for sorting out your mortgage problems, than the ones mentioned on this page.
For more information about your other options, see the following pages: