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Can’t afford a mortgage

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Jan 8, 2023

Emma Lunn

Fact Checked By:
Emma Lunn - Finance Editor

Can’t afford a mortgage? This is what to do:

Some people come to us thinking they can’t afford to take out a mortgage. Other customers ask our advice when they have difficulty meeting their mortgage payments.

No matter what your situation, we are here to help you.

You can contact us today for free mortgage advice. We can offer specific advice regarding your personal situation .

We will match you with an advisor who is experienced in finding affordable mortgage solutions for people in similar situations.

They will be glad to answer any questions you may have and can help you find the best products for the most affordable price.

We offer a service that is completely free of cost and without obligation.

We are expert mortgage brokers

We have access to over 200 lenders in the UK to get you the best rates

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Help! I can’t afford my mortgage. What should I do?

Some people are really struggling financially at the moment. The rising cost of living and the ongoing impact of the pandemic mean a lot of people are finding it difficult to budget. Some existing homeowners – especially those with large mortgages – are among those needing financial advice and support.

There are many options, including specialist mortgage products, mortgage payment holidays, home owners support fund, support for mortgage interest rates, government schemes and personalised advice from our expert mortgage brokers.

Contact us for financial advice today.

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Talk to your mortgage lender first

We get many calls from customers asking us questions such as “I can’t pay my outstanding mortgage balance this month.” We always advise them to  contact their lender in the first instance. Your lender might suggest:

  • Extending your mortgage term. This will lower your monthly repayments as the cost is spread over a longer time. You can extend your term without remortgaging
  • A payment holiday: This may give you some time to get your finances in order, but it can also have an impact on your credit rating.
  • Defer mortgage payments. If you think your financial problems will be temporary, your lender may allow you to defer your mortgage payment for a certain period and then make up the difference at a later date.

What are my options if I cannot afford to make mortgage payments?

Don’t panic if you can’t pay your mortgage payments. There are five options available to you.

  1. Remortgaging
  2. Reverting to interest-only
  3. Product transfer
  4. Equity release
  5. Government schemes

1. Remortgaging

Remortgaging is a way to refinance your mortgage. It involves taking out a new mortgage to pay off your existing one.

You can save money if the new mortgage has a lower interest rate. You might be eligible for a lower interest rate if your home has gone up in value since you last took out a mortgage.

You can also remortgage over a longer term to reduce your monthly payments, although this will mean a bigger interest bill overall and the new deal will be subject to your credit report, income, and age.

Consolidate your debt by remortgaging

Many people are struggling with non-mortgage debts. These debts might be at a higher interest rate too.

You can consolidate your debts by remortgaging. This involves taking out a bigger mortgage than the one you need to pay off and using the extra money to pay off your other debts. You will then just need to make one monthly debt payment – your mortgage.

It’s best to talk to an expert before you remortgage to consolidate debts. There may be an early repayment fee on your current mortgages, as well as other fees related to remortgaging.

Securing additional debt against your house is a significant financial decision that should not be taken lightly. In the event you can’t keep up with your payments, your home may be at risk.

Before you commit to any financial arrangement that involves putting your home up as security, get independent expert advice. To speak to one of our expert mortgage brokers, submit an enquiry today. As a mortgage company, we will offer free mortgage advice to help with any problems affecting your mortgage payments.

We will match you with a lender who is experienced in helping people consolidate and remortgage their debts. They will be happy to answer any questions you may have and inform you about your options. This service is completely free of charge and you are under no obligation.

We often hear the phrase “I can’t pay my mortgage”, but most lenders will be happy to help and offer solutions such as a remortgage or mortgage holiday.

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Second charge mortgages

A second charge mortgage could be a viable option if you are tied to your current lender or don’t wish to lose a competitive second charge mortgage interest rate.

This involves taking out a second loan secured on your home.

To get started, submit an enquiry today.

2. Change to interest-only mortgage repayments

Assuming you are on a capital repayment mortgage, converting to an interest mortgage will lower your monthly payments.

You might be able to switch to interest-only on your current mortgage product, or switch to a new mortgage.

An interest-only mortgage means you only pay only the interest on your debt each month. You’ll need to repay the capital at the end of the term. While this will result in lower monthly payments, you will need to have a viable repayment plan in place before the loan is approved.

3. Product transfer

You could also consider a product transfer. This means switching from your existing mortgage to another one with the same lender. For example, you might move from your lender’s standard variable rate (SVR) to a fixed rate.

Assuming that you want to keep the loan amount the same, this can be quite a straightforward process and will be easier than remortgaging.

A product transfer is a better option than a remortgage because you won’t be subject to a full affordability assessment and there aren’t usually any complex legal processes, making it a more affordable option.

Talk to a mortgage broker who is experienced in all aspects of the market, such as the one we work with.

Contact us today to speak with a broker experienced in mortgage product transfers. We’ll match you up with one who can help you determine the best option based on your specific circumstances whether you are struggling to pay your mortgage, meet repayments or have missed a payment.

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4. Are you 55 years old or older? Consider equity release

Equity release, also known as lifetime mortgage, allows homeowners aged over 55 to withdraw cash from their property without needing to move house.

There are usually no monthly payments. After the property is sold, the outstanding balance will be repaid. This can happen when you move later, enter residential care, or die. The big downside is that equity release can be expensive and will reduce the amount of money you can leave your children or other beneficiaries of your will when you die.

5. Government schemes

If you are struggling to pay your mortgage, the government’s Support for Mortgage Interest (SMI) scheme might be able to help. SMI used to be offered as a grant but changed to a repayable loan in April 2018.

SMI is only able to help with the interest that you pay on top of your mortgage payments. You can’t use it to reduce the capital you owe. You’ll need to repay the money when you sell your property or transfer ownership of your home. Learn how you may transfer your mortgage using our standalone guide.

To be eligible for an SMI loan, you will need to be claiming benefits such as Universal Credit. The government website has more information about the scheme.

Separate SMI schemes are run by the English, Welsh and Scottish governments.

Get free advice from one of our expert advisors if you have missed payment or you are having trouble paying your mortgage.

We’ll help you solve your mortgage problems by matching you up with an expert.

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What happens if I get divorced and cannot afford my mortgage?

If you are divorcing and your name is on the mortgage, you will be required to continue paying your bills even if your property has been sold.

If you or your partner decide you don’t make payments anymore on your joint mortgage, it can affect both your credit ratings. You each agreed that you would be responsible for the debt when signing up for the loan so you should both accept liability.

There are options if you don’t have the funds to pay your mortgage anymore.

  • One partner can buy the other out. This normally involves taking out a new mortgage which will need to be approved by the lender.
  • If you plan to stay in the property, you can remortgage.
  • You can take out a product transfer with the same lender.
  • Ask your lender whether you are eligible to switch to an interest-only mortgage.

Divorcees who can’t pay their mortgages on time will not receive any assistance from the government or the mortgage lenders. However, you can make an enquiry to speak with one of our expert mortgage advisors. This will give you a no obligation chat about your options.

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What happens if I am on maternity leave?

If you are unable to afford mortgage payments due to a fall in your income during maternity leave, many of the same options will be available to you. However, it is important to contact your lender to let them know that you are having difficulty paying your mortgage repayments while you are on maternity leave.

Your mortgage lender may offer you a payment holiday or adjust the term length, but there might be other options such as lowering the mortgage repayments for a period of time.

What happens if my partner dies?

If you have a joint mortgage, the mortgage debt will automatically transfer to your name if your partner dies. Most lenders will be sympathetic to your situation if you can’t afford payments in the short-term but if affordability is a long-term problem, you’ll need to find a solution.

Contact your lender if your partner dies. They will be able to explain your options.

Many couples will have life insurance or mortgage payment protection insurance in place. These protection policies can help you pay the mortgage. If you don’t have this type of insurance, speak to one of our specialist advisors.

We will match you with a broker that we work with to ensure they have the expertise and experience to help people in similar situations. They will be glad to answer any questions you may have and provide the advice that you require.

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What happens if I cannot afford my second mortgage payment?

Many of the solutions we have discussed in this article can also be applied to homeowners who struggle to pay their mortgage on a second house.

This is a common scenario where borrowers have remortgaged their homes onto a buy-to-let agreement and used rental income as a way to pay the mortgage repayments. Our dedicated page on buy-to-let mortgages contains more information about BTL mortgages.

What happens if I don’t have the money to buy a house?

Customers often tell us that they don’t have the money to buy a property. However, this is not always true.

Borrowers with limited incomes have a variety of options and products that can help.

  • Mortgages for low income
  • Help to Buy
  • Shared Ownership

These are just some of the possible options if you are worried you can’t afford a mortgage. Talk to a mortgage broker to learn about other options.

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How to increase your financial flexibility

There’s a possibility that you may have approached the wrong lender, or used the wrong broker if you were told that you don’t have enough income for a mortgage. While most mortgage lenders won’t allow you to borrow more than 4.5 times your annual income, there are some mortgage providers that have a higher limit.

Some lenders offer mortgages that are based on five times or more income. If you have the right circumstances, they might even be able to provide mortgages up to six times. However, it is difficult to find these lenders without the help of a broker.

Use an online mortgage calculator to find out how much you can borrow based upon 5-6 times your salary.

Talk to a mortgage expert about your financial situation today

Call today if you have any questions regarding mortgage affordability or to make an online enquiry.

We will match you with a broker who has experience in similar cases to yours. They will be glad to answer any questions you have and provide information about all options available to you in order to get the mortgage that you desire.

Our service is completely free and there are no marks or obligations on your credit rating. Contact us now as there is no fee if you get a mortgage through one of our brokers.

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