What Happens If I Don't Pay My Mortgage?

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A growing number of people are struggling to pay their mortgages as COVID-19 and its impact on the economy leads to reduced incomes and job losses.

The government’s Coronavirus Job Retention Scheme (CJRS) is scheduled to end on 30 September and according to the government’s most recent statistics, published in February 2021, 11.4 million jobs have been supported by the scheme since it began in March 2020. When this support is taken away, many businesses will be forced to make job cuts to stay afloat. The Bank of England has said that unemployment could reach 5.5% towards the end of the year — compared to 3.9% in January 2020.

Have you been wondering, “What happens if I don’t pay the mortgage?” Whether you’re already finding repayments a challenge or you’re concerned about what could happen if your financial situation changes, read on to find out.

What Happens When You Miss a Mortgage Payment?

First of all, don’t panic. Yes, technically you are deemed to be “in arrears” as soon as you miss a payment, but there won’t be bailiffs at your door and repossession notices any time soon! 

Most mortgage lenders will offer a grace period of around 15 days before getting in touch with you to find out what the problem is. Even then, they’re unlikely to be baying for blood — they will want to know why the payment is late, when you will be able to pay and how they can help. 

The best approach is to take control and contact your lender as soon as there is an issue with making payments. Mortgage lenders are regulated by the Financial Conduct Authority (FCA) and they must abide by the Mortgage Conduct of Business (MCOB) rules. These stipulate that repossession should be used as a last resort if all other reasonable attempts to find a solution are unsuccessful. 

Your Step-by-Step Guide on How to Avoid Repossession

1. Contact Your Mortgage Lender

Don’t bury your head in the sand and hope the problem goes away. It won’t. Speak to your lender and work with them to come up with a way to get you back on track. For example, if your situation is temporary, see if you can agree on reduced payments for a fixed period. 

2. Get Some Free Professional Advice

Several charities and government organisations offer free support and advice to people who are struggling to pay their mortgage — for example, Step Change, National Debtline and the government’s Civil Legal Advice organisation. Once you understand where you stand and what your options are, it will be easier to find a way forward.

3. Assess Your Finances

Review and prioritise any existing debts and financial commitments you have. Can you make cuts anywhere or change the terms of loans to free up some cash each month? We’re guessing that paying the mortgage is more important than keeping Sky TV, for example. And explore any possibilities for new income streams, such as renting out a spare room to a lodger or signing up for any benefits you are eligible for.

4. Switch Mortgages

Is there a better deal you can switch to? Remortgaging can be a great way to reduce monthly payments. However, you may be liable to pay early repayment or exit fees, especially if you want to move to a different lender. Do your research to make sure that switching is worthwhile. Alternatively, consider extending the term of your mortgage to reduce monthly payments.

5. Get a Quick House Sale

This may be easier said than done on the open market. The average time to sell a house in the UK is around four months. However, the selling process is currently much slower due to a high level of demand. A quick house sale company can buy your house for cash in as little as seven days. Be sure to do your due diligence though, not all companies that advertise themselves as cash buyers are genuine — if you don’t choose with care, you could wind up with unexpected costs and delays. If your financial situation is unlikely to improve, selling house may be the best way to clear your debts and make a fresh start.

Are you struggling to pay the bills? If your financial situation is unlikely to improve, a quick house sale could be the solution you’re looking for. We can buy your home within 7 days with no estate agents or legal fees to pay.

Get your no-obligation cash offer today.

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