Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Can’t Pay Your Mortgage? Here’s What To Do
Reading Time: 6 minutesIt’s no secret that many people have been struggling with money recently. Since the COVID-19 pandemic began, huge numbers of people have spent time out of work – whether because they were on furlough, or because their places of work were closed during the lockdown. Unfortunately, as furlough winds up and mortgage holidays come to an end, many more people will start to feel the financial strain that the pandemic has caused. If you’re worried that soon you’ll be struggling to pay your mortgage, you’re definitely not the only one. It’s a worry that is being felt by families across the country.
Here, we’ll think about a few things that you can do if you’re worried about being able to pay your mortgage once the Government’s extended mortgage break is over.
- When Do Mortgage Holidays Come to an End?
- Try to Negotiate an Extra Break
- Look at Ways to Reduce Other Bills
- Talk to a Mortgage Adviser and Consider Remortgaging
- Find Ways to Make Extra Cash
- Get Free Debt Advice
- More Mortgage Tips
When do mortgage holidays come to an end?
This article was updated on 2nd November 2020. The original article said the mortgage holiday scheme ended on 31st October 2020.
With the announcement of the latest lockdown through November, this means mortgage holidays (and other consumer lending) will be extended. If you’ve already had six months’ mortgage freeze, however, you won’t be able to extend further. If you had applied previously and have had, for example, three months’ holiday so far, you can top this up to a six-month total.
Anyone who hasn’t yet applied for a mortgage holiday can do so and receive six months’ payment freeze. Remember, interest still accrues during this time.
Don’t Just Keep Not Paying!
If you’ve had a mortgage holiday already, it’s really important to take steps NOW to prevent debt. If you continue to not pay your mortgage after your holiday ends, your credit score will be seriously affected. You could also end up in a debt spiral.
Act now to get up to six months’ breathing space if you’re worried about making payments.
negotiate an extra break
If you’re definitely going to struggle to pay your mortgage after this month, you could consider asking your bank for a renegotiation or for an extension on the payment freeze. You should also be aware that, if you’ve already had a total of six months’ holiday, any further extension will impact your credit score.
Anyone who hasn’t yet had a mortgage holiday, or who wants to extend, can get in touch with their lender to arrange the freeze. The FCA has confirmed the extension or new applications will not impact your credit score, unless you require more than a total of six months’ holiday.
Reduce Other Bills to Pay Your Mortgage as Priority
Not being able to pay your mortgage could have significant consequences. You don’t need us to tell you that! If you’re struggling, it might end up less costly (and less risky) to negotiate with your other suppliers instead.
You could potentially save money on your bills if you can negotiate with your energy provider, for example, to reduce or freeze payments for a few months. As a side note, if you’re in energy arrears you could apply for funding help. There are various energy hardship funds that might be useful to you in this case.
Make sure you’ve applied for all the benefits and grants you can, too. Use the Turn2Us benefits calculator and grant finder to check for any funding that could help you with other costs, freeing up cash to pay your mortgage.
Finally, check with your local council about getting a Council Tax reduction or freeze. If you’re a low income household, you could qualify for a £150 reduction due to the pandemic, so make sure to ask about that. Your local authority may also be able to signpost you to other services that can help you manage your cash so you can pay your mortgage with more ease.
Tips to reduce your bills
If your utilities suppliers aren’t budging, there are still things you can do to reduce your bills and free up cash to pay your mortgage.
- Reduce your energy consumption: turn appliances off at the wall, switch off lights when you leave a room, turn the thermostat down a few degrees
- Save water costs – request a water meter if you’re single or in a couple
- Switch branded items for own-brand supermarket products
- Cancel subscriptions and see which you could share with friends and family to slash costs
- Set a cash budget for shopping and stick to it.
Talk to a mortgage adviser and consider remortgaging
If you need to reduce your costs, consider remortgaging your home. This involves paying off your initial mortgage by taking out another mortgage, and having your home sit as security against it. Remortgaging is often used by those who want to pay less or free up money for other purposes. If you’re not tied into a fixed term agreement, remortgaging could slash thousands of pounds from your total mortgage – especially as interest rates are now at historical lows.
Again, there are no guarantees with this. You might not be able to find a new lender who wants to take you on. There is the possibility, though, that a mortgage adviser could help you move or change your current deal in order to reduce the monthly costs that you need to pay. No, it’s not a complete freeze on your mortgage. But it could help to cut your costs, and that might end up being all you need.
Be aware, if you go down this route, that you are likely to be paying your mortgage off for longer than you had originally agreed.
Pay your mortgage by finding ways to make extra cash
Of course, this might not be possible for a lot of people. But if you do have the capacity to take on a second job, or some extra work in the evenings or weekends, this might just be the time to do it. Great at crafting? Why not soothe your worries and spend some time on it, before looking into the possibilities of selling online? Does your local shop need an extra pair of hands at the weekend? Offer up your services.
If you do want to make some extra money, we’ve got a lot of articles on the subject. Here are just a few of them:
- How to Make Money from Home with Your Creative Talent
- How to Make Money on Social Media
- 3 Ways to Make Money Telling Your Real Life Story
- Make Money Ethically in Your Community
There are other ways that you can increase your income too, aside from extra work. If you’ve got space, could you rent out a room to a lodger? This is something that people have done for hundreds of years to keep the money coming in in hard times, so you certainly won’t be the first. Remember, too, there’s often a lot of stuff around your home you don’t need anymore – clear your clutter to free up space AND get cash!
Remember to post your new crafts, dog walking or ironing service, or local cake making skills on our MoneyMagpie Marketplace, too. It’s free to list – so you don’t pay a penny unless someone buys something from you.
Get Free debt advice
Yes, this is something that you should definitely do if you’re struggling to pay your mortgage and finding yourself getting into debt because of it. There are lots of places that you can get free debt advice. The experts on hand will be very used to dealing with situations like yours, so your case won’t come as a shock to them.
Here are a few places that could help:
Are you struggling to pay your mortgage? Worried about how the end of the mortgage holiday will affect you this winter? Feel free to share your story (and hopefully get some further helpful advice) over on our forums.
More MOrtgage Tips:
Need more help with your mortgage options? Try these next!
- Tracker Mortgages: The MoneyMagpie Guide
- Should I Remortgage to Pay My Child’s Debts?
- 10 Ways to Get a Self-Employed Mortgage After Coronavirus
- Looking for Mortgage Advice? Why a Specialist Broker is the Answer
Helpful advice in these times.