Mortgage repayments are a large portion of most homeowner’s general expenses and losing your job can strain your ability to make these repayments. The good news is, if you’ve been made redundant, there is help available.
Claim under any protection you may have
The first step is to check if you’ve got any protection in place that will cover you if you’re made redundant such as mortgage payment protection insurance. If you do, check your policy to see if you’re able to make a claim.
Speak to your mortgage adviser
Your mortgage adviser will be able to give you advice on how to pay your mortgage, and the different support options available to you.
A popular option they may suggest is to take out a mortgage payment holiday, also called a freeze or a deferral. To determine whether this is the right option for you, speak to your mortgage adviser and they will be able to guide you in the right direction and liaise directly with your lender.
What does this involve?
- A mortgage holiday allows you to not have to make any mortgage payments for a limited period of time.
- You can request a mortgage payment holiday of up to six months in total, although lenders can only agree to payment holidays of up to three months at a time.
Taking a mortgage payment holiday means the pressure on your finances may be relieved in the short term. But remember, you’ll still be charged interest whilst you’re taking it. This means the overall amount you pay for your mortgage is likely to increase.
Also, taking a payment holiday could have a bearing on future lending decisions. If you’re struggling to make mortgage repayments, you should always consider the long-term implications of any financial schemes you take advantage of.
Claim any benefits you’re entitled to
If you have lost your job, then ensure you claim any benefits you’re entitled to. There are online calculators that can help you see what you’re able to claim.
And if you’re on certain benefits and you’re struggling to pay your mortgage, you may be able to get help from the government to pay the interest. This is called Support for Mortgage Interest (SMI).
How SMI works:
- What do I get? If you qualify for SMI, the government will pay the interest on up to £200,000 of your mortgage, or up to £100,000 if you’re receiving Pension Credit.
- How is it paid? SMI is paid as a loan which you’ll need to repay with interest when you sell or transfer ownership of your home. And payments are usually made directly to your lender.
- How quickly can I get access to it? There’s a 39-week waiting period from the time you claim SMI until your first payment is made. If you’re on Universal Credit, the waiting period is nine assessment periods (the equivalent to nine consecutive months). However, those getting Pension Credit can get the help straight away.
When it comes to calculating how much they’ll pay, the government uses a standard interest rate. This may be different to the interest rate you’re paying on your mortgage. Bear in mind, SMI can only help pay your interest payments. It won’t pay off the capital of your mortgage.
Ask for support from your lender
Whether speaking to your adviser, or to your lender directly, you can ask for support if you need it. Lenders have a variety of support options available for borrowers who may be having issues paying their mortgage. They will be able to offer you tailored options that suit your financial circumstances, ensuring you’re able to meet your monthly payments in a more manageable way.
Try to prepare yourself financially
If you’re facing financial hardship, it’s more important than ever to make the most of every penny you have. Go through your monthly budget carefully and see where you can slash your spending. Look at ways to maximise your income - is there any temporary work you can get to keep you going while you’re looking for your next position? - Also, have a clear out at home to see what you can sell to raise funds.
Don’t be afraid to seek help
If you’re still worried about your finances then you can seek free and confidential debt advice from a debt charity such as StepChange and National Debtline. If you’ve lost your job and want to find out more about protection and insurance policies, or you just want a chat with people who are here to help, our expert protection advisers are always here.
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