What happens if you do not pay your mortgage on time?
The mortgage provider will contact you to find out why your payment has not come through. At this point, they should give you the chance to get your payments back on track.
It is normal to worry about repossession. But it is always a last resort.
When you contact your lender they will:
- Give you the option to pay what you owe in full
- Consider letting you pay what you owe in instalments. If you cannot pay the full amount
They may take further action to collect the debt if you fail to keep to your payment arrangement.
You may be charged a penalty fee for a late payment. Check your mortgage agreement for this.
Options your lender may discuss with you
Switching to an interest-only mortgage
- This is not a long-term solution
- You would only be paying the interest part of the mortgage
- You need to make sure that you can pay the ‘capital’ at some point before the end of the term
- The 'capital' is the original amount borrowed
Extending the term of your mortgage
- This will lower your monthly payments, making them more affordable
- You should think about whether you would be able to continue paying the mortgage over a longer period of time and into your retirement
Giving you a payment holiday
- This means you would have a break from paying your mortgage for a few months
- You will need to catch up with these payments before your mortgage term ends
- Your lender may charge interest during the payment holiday. This would mean you pay back more overall
Helping you with an assisted voluntary sale scheme
- Your lender may offer an assisted voluntary sale scheme
- This means they will give you extra time and help if you decide to sell your property
Recommending government mortgage help
How I can clear my mortgage arrears?
Start by creating a budget so you have a clear understanding of your finances.
- List all your income, spending and debts
- See if there is any money left over after you have covered all your household bills and living costs. This is the amount you can afford to pay towards your mortgage arrears. And other debts, if you have any
- Look into ways to increase your income and reduce your spending. This way, you can pay off what you owe faster
- Contact your lender to ask them to agree to a new payment plan. Give them a copy of your budget to show them you really are paying as much as you can afford
If you are worried about not being able to afford your monthly payments, get in touch with us for free debt advice.
How long do mortgage arrears stay on a credit file?
All missed, late or partial payments are recorded on your credit file for at least six years.
Find out more about debt and credit files.
Can I sell my house with mortgage arrears?
Yes you can. Sometimes this is the best option if there is no other way to pay what you owe. But, you do need to think about whether this would be the best option for you. It might not be suitable if:
- You are in negative equity. This means the property is worth less than you owe to the lender
- You would have to rent a home with higher monthly payments
- You are thinking about going ahead with an insolvency solution, such as bankruptcy
The person overseeing any bankruptcy may look into the sale when they investigate your insolvency. They will need to check you sold it for a fair price and did not break any bankruptcy rules.