If you are having difficulty meeting your mortgage repayments or

are worried it may become a problem in the future, here is some

information which may help you.

If you are in this situation there are three steps you should follow:

1. Tell your lender as soon as possible: your lender will be

sympathetic and will provide as much assistance as possible.

2. Get advice: there are organisations which offer free and

independent financial advice.

3. Check the help available to you: your repayments may be

covered by an insurance policy or you may be eligible for

government benefits or schemes which could help you to

stay in your home.

If you are having trouble paying your mortgage, or you think it

will be a problem in the near future, you should tell your lender

immediately. Your lender will be fair and work with you to find a

repayment solution.

Some lenders have telephone help-lines or debt counselling

facilities to assist making contact. The sooner you contact your

lender the better, so that action can be taken to deal with the

difficulty.

If you can’t afford your full mortgage repayments you should talk

to your lender and still pay what you can afford. This shows your

lender you are committed to solving the problem and makes it

easier for them to help you. There are several options that your

lender may be able to consider including:

of the loan.

provided you understand you will not be paying anything

off the actual mortgage.

than seeking immediate payment.

until you are able to resume full payments and repay any

arrears that build up as a result.

you make them.

The earlier you make contact, the more options there are available

to resolve the problem. However, these are short-term solutions

and in the long-term a repayment problem will have to be resolved.

Your lender will wish to stay in regular contact with you to keep

up to date with any changes in your circumstances.

Each lender has a policy setting out how they will treat borrowers

when their mortgage is in arrears. Your lender should provide you

with information explaining how you can expect to be treated by

them.

There are a number of organisations which offer free and

independent financial advice. Their counsellors can help you

assess your financial problems and advise the best course of action

to solve them.

If you are worried about approaching your lender direct – or if you

have multiple debts – these debt advice agencies can help you.

Lenders will work with these agencies if they are acting on your

behalf.

Debt advisers can also tell you about the government schemes to

help homeowners and help you apply for them.

Ensure that you prioritise your debts and rank them by importance,

primarily food, utilities and shelter. It is also important to preserve

your good credit rating in order to be able to rent or buy a home,

buy financial products, or even for employment.

If you become unemployed, have an accident, or are too sick to be

able to work, you should check whether you have a mortgage

This type of insurance would usually have been taken out at the

same time as your mortgage and, if you have an eligible claim,

will cover your mortgage repayments up to a period of 12 months

or sometimes more.

The state benefits and schemes to help homeowners in difficulty

have recently been strengthened. It is worthwhile seeking advice

on whether you are eligible for any of the schemes or benefits

listed below.

Income Support for Mortgage Interest (ISMI) helps homeowners

on benefits with their mortgage interest payments provided that

the mortgage was used to purchase the home or for work to

maintain the property's fitness for occupation.

It is available to people claiming:

There is an upper limit of £200,000 on the size of mortgage which

ISMI will cover. Restrictions can be imposed if your housing costs

are considered to be excessive. You cannot claim if you work 16

hours or more per week, or your partner works 24 hours or more,

or if you have savings of over £16,000.

In addition to interest payments, ISMI may also cover ground rent

or certain service charges, but it will not cover the capital part of

your mortgage payments or the premiums on an endowment policy.

The timing of the assistance will depend on when you took out

your mortgage, but usually you will start receiving assistance 13

weeks after the start of a claim. ISMI is normally paid direct to

your mortgage lender and credited to your mortgage account every

four weeks in arrears.

The upper limit on the rate of interest paid is 6.08% and there is a

two year time limit in which you can claim IS for mortgage interest.

For information and advice on ISMI, or to make a claim, visit the

0800 055 6688.

The government has announced a scheme to allow borrowers who

are facing possession because of a large but temporary reduction

in their income to defer part of their interest payments for up to

two years. The deferred payments would then be added on to the

outstanding mortgage balance. This scheme is not up and running

yet but further information is available on the Directgov website –

Mortgage Rescue schemes are operated independently in England,

Scotland, and Wales.

To find out if you are eligible for mortgage rescue or another form

of assistance you should contact your local authority or Citizens

Advice Bureau.

Mortgage rescue schemes in England are aimed at vulnerable

households facing possession (families with children, the elderly,

those with a disability or pregnant women). There are two forms:

equity in your property which reduces your monthly

mortgage payments. You still remain the outright owner of

the property; and

mortgage debt and you then become a tenant of the housing

association, paying a rent you can afford.

Information on mortgage rescue schemes in England can be found

If you are facing possession in Scotland you may be eligible for

the mortgage to rent scheme – where the housing association buys

your home and you to continue to live there as a tenant.

To apply, you must first get advice about your financial situation

from a Citizens Advice Bureau, a debt advice service or other advice

agency, a solicitor, or your local authority.

Information on the mortgage to rent scheme can be found at

The Scottish Government recently announced an expansion of

the Mortgage to Rent Scheme and a new Shared Equity Scheme

which will start on 16 March 2009.

The mortgage rescue scheme in Wales take two forms:

equity in your property which reduces your monthly

mortgage payments. You still remain the outright owner of

the property; and

mortgage debt and you then become a tenant of the housing

association, paying a rent you can afford.

Priority is given to families and people who live in specially adapted

housing.

Information can be found on the Welsh Assembly website –

Welsh Assembly Government Housing Directorate Tel: 01685

729156 or 01685 729157, email: shg@wales.gsi.gov.uk.

Working Tax Credit and Child Tax Credit Working Tax Credit and

Child Tax Credit are administered by Her Majesty’s Revenue and

Customs (HRMC). Please see the HMRC website for further

information or call 0845 300 3900.

The Council Tax Benefit is available to help people on a low

income with their council tax bills. For further details visit

You should never take out a loan at a higher rate of interest to pay

your regular mortgage payments; this will only make the problem

worse. Don’t ignore letters or telephone calls from your lender; if

you are not sure what they mean ask your lender or a debt adviser.

Don’t stop paying altogether if you can’t afford the full repayment:

talk to your lender and pay what you can each month.

You may be thinking about abandoning your property or sending

the keys to your lender. You should not do this without talking to

your lender first and understanding the consequences. You should

be aware that:

including the interest building up on the loan, until the

property is sold.

and will still owe any shortfall between the sale price of

the property and the outstanding debt.

the total amount owing.

their properties repossessed and may find it more difficult

to obtain loan finance in future.

Some companies offer to help you if you get into financial

difficulties with your mortgage payments by buying your home

and then renting it back to you for a fixed period of time (six

months or more). These are sometimes called ‘mortgage rescue’,

‘rent-back’ or ‘sell-to-let’ schemes.

compensation procedures if things go wrong. They are not the

same as ‘home reversion’ schemes which are for people who have

paid off their mortgage and want to sell part or their entire home

for cash and retain the right to live in it for a nominal rent. They

should also not be confused with the government mortgage rescue

schemes.

Selling your home in this way may allow you to clear your

mortgage debts and stay in your home. However, if you opt for

such a scheme you will no longer own your home and could still

be evicted if you fall behind with your new rental payments or be

given a Section 21 notice, where the landlord will automatically

be given possession as long as the landlord has followed the

correct procedure. In addition most of these firms will pay you

less than the market value of your property, so think carefully and

seek advice before entering into such a scheme and make sure you

understand the consequences.

Most mortgage lenders are trustworthy and provide a valuable

service by allowing families to own a home without saving enough

money to buy it outright. But dishonest and “predatory” lenders

do exist and engage in lending practices that increase the chances

that a borrower will lose a home to repossession. Beware

especially of those who make high risk second mortgages. Other

abusive practices include:

have the income to repay it.

value to the borrower.

Borrowers facing unemployment and/or repossession are often

targets of predatory lenders because they are desperate to find any

“solution”.

information about predatory lending and how to avoid it –

The industry regulator has a series of practical guides on

managing money and financial products on their

website including this guide on: ‘what to do if you can’t pay your

Can help with a range of problems including money and housing.

Find the contact details for your local bureau on the Adviceguide

Charity offering free, confidential advice including a

comprehensive website section on mortgage arrears –

Housing charity offering a comprehensive source of advice and

information in housing, including avoiding repossession – see

Offers assistance in resolving multiple debts – see their website

Free confidential advice on debt problems – see the Payplan

Credit Action is the national money education charity and provides

a range of free materials, tools and resources to help you

manage your money well and to understand your options if you

are struggling with debt, housing or redundancy issues. –

Many local authorities have comprehensive housing advice

centres which give necessary information about what

housing may be available. Shelter and CAB can also offer

advice and assistance on housing.

In the event that remaining in your home is no longer an option,

you will need to find an estate agent to help you sell your

home. The following services can help you find an estate agent: