If you ever find yourself in a position where you can’t pay your monthly mortgage payment, don’t panic. If you act fast and sensibly you should be able to come up with an agreement with your lender and be back on your feet in no time.
Contact your lender
The moment you realise you can't make your monthly payment, it's time to call your lender. If you get in touch with your lender before they have to get in touch with you, they’ll know that you’ve got your eye on the situation and are taking it seriously.
Your lender will want to help you. They want to keep you as a customer and they’re also obliged to try to reach an agreement with you. This means they have to consider changing both the schedule and form of payments, if necessary. Talk to them about working out a plan that will allow you to make your payment this month.
Remember that handing back they keys is always the absolute <strong>last</strong> resort for both you and them.
Home Economics 101
Your mortgage has to be your number one financial priority. In order to cut down your living costs you need to take a good look at your expenses. Sit down and make a list of your regular expenditures, then think about which ones you can cancel. Netflix and Spotify subscriptions could be the first to go, but who knows - maybe you’ll rediscover a love of Radio 4.
If possible, the classic advice is to reduce the amount of money you spend eating out. When you’ve got your finances back on track, then it's time to start eating out again. Until then, and use resources like Cooking on a Bootstrap to shop and eat more economically. The more you can strip out of your monthly spending, the better.
Check if you’re insured
Don’t get too excited, but there’s a chance you might be covered by insurance.
Some people take insurance out when they first get their mortgage. If you’re not sure whether you did or not, have a look through your paperwork and ask your lender. Whether or not you’re covered by the insurance will depend on your circumstances, but it’s likely to protect you if you’ve had an accident, are unwell, or have been made redundant.
Check if you qualify for extra help
If the reason you can’t make your mortgage payment is because of an injury or unemployment you might be eligible for government support. Visit the gov.uk website to check if this is the case. If you do qualify for benefits, you might also qualify for SMI, a government scheme which might repay the interest on your mortgage, although not the mortgage itself. If it does apply to you, this could make a huge difference!
Give a free debt counselling service a call
There are lots of free, non-profit services out there which have been specifically set up to help people in your situation. Taking advantage of this advice is a great idea. Debt counsellors will likely present solutions you hadn’t thought of; they’ll understand your options with more clarity than your friends, and even if you just use them as a source of support, they’ll help you to think clearly about what to do next. Try Citizens Advice or National Debtline.
Not only is calling a debt counselling service valuable for your mental and financial health, it also has the added benefit of looking good in the unlikely event that you end up in court. It works in your favour that you’ve gone out of your way to sort out your finances.
Check to see if you're on the best mortgage deal
Competition between lenders, changing interest rates and increasing property values mean there’s likely a switch that can save you money. Reviewing your mortgage regularly helps you to stay on top of the mortgage market and understand whether your mortgage is really the best one out there. Downloading Dashly makes this process even easier – the app will constantly trawl the mortgage market looking for cheaper deals to make paying back your mortgage easier. Visit our website to find out how this could help take a load off your mind.
Set aside an emergency fund
Finally, once you’re back on track with your mortgage payments, start thinking about setting aside money for an ‘emergency fund' to save you from similar situations in the future. Aim to save £1000 if you can. This might require making some lifestyle changes, but it ensures that the next time you end up in this situation you’ve got a buffer - not to mention peace of mind.