Help with your Mortgage: Support is available

If your fixed rate has ended or is coming to an end, you may find that you’ll automatically be put on your lenders higher standard variable rate which is often 2-3% higher than a new fixed rate mortgage. You may find that your mortgage rate has increased from 2% to around 7%.

At present fixed rate mortgages in the UK are between 5-6% with many lenders having their standard variable rate in the region of 7%.

Here’s a step by step guide your options if you need help with your mortgage repayments.

Contact your lender
Get free advice
Consider the mortgage rescue scheme
Get support for mortgage Interest
Review benefits that can help toward paying your mortgage
Revise your budget and save on things you don’t need

Contact your lender

Reaching out to your lender first can really help iron out any concerns you have with mortgage repayments, many lenders will help to avoid repossession where possible and similar to mortgage holidays during the COVID-19 pandemic there are options supported by the government.

Your lender can discuss your options with you and can offer suggestions, including:

Temporary payment arrangements
Extending the term of your mortgage
Switching temporarily to interest-only repayments

These options can allow you to either temporarily pause payments or reduce your monthly repayments, this can enable to to plan ahead and re-assess your affordability. We suggest speaking with a mortgage or financial advisor if you are unsure of the benefits and negatives of each of these options. However in summary you’ll be often be paying more back in interest in the long term by making lower monthly payments on your mortgage.

Advice is available

Should you be concerned about not being able to meet your mortgage commitments, advice and guidance is available.

You can speak with the national debt line, either through their website or on the phone and look at what options are available to you.

Mortgage rescue scheme

Some local authorities and housing associations in Wales operate mortgage rescue schemes (MRS) to help homeowners avoid mortgage repossession if it is likely that otherwise the homeowner will be homeless.

These schemes are very different to sale and rent back schemes operated by private, profit making companies.

Schemes are set up to work in two different ways:

Some households will get a shared equity loan.
Others will be offered help from a ‘mortgage to rent’ scheme, whereby a local housing association buys their property and rents it back to them.

Shared equity loan
To be eligible for a shared equity loan, you will need to have some equity in your property. If you qualify, you will be given an equity loan from a housing association which should enable you to keep up with your mortgage payments. The loan is repayable to the housing association but is interest free.

Mortgage to rent
If you cannot afford to continue owning a share of the property, the housing association may decide to buy the property at close to market value, and rent it back to you.

You would no longer own your own home and in most cases you would be given an assured or an assured shorthold tenancy.

Each council or housing association will have it’s own criteria to decide who is eligible for help under their MRS. You will need to contact them directly to see what their criteria are.

Funding for most schemes is limited, so not everyone who applies will accepted. Some of the things they are likely to consider when deciding if you can get help through the MRS are whether:

You live in specially adapted housing to meet the disability needs of your household
You would be in priority need for re-housing by the council if you become homeless
Your lender intends to repossess your home
You will be homeless if the property is repossessed
Yhe property is your only or main residence
The property is clear of any legal reasons that would prevent it being sold
You are unable to sell the property and buy a more affordable home locally.

You can also contact your local council’s Housing Options team, homelessness team or housing strategy officers for advice as to whether there is a scheme in your area which could help you.

Support on Mortgage Interest

If you’re claiming these benefits, you could claim help with your mortgage interest payments. This is called Support for Mortgage Interest (SMI) and is offered as a repayable loan. Eligible benefits can include:

Income-related Employment and Support Allowance
Income based Jobseeker’s Allowance
Income Support
Universal Credit
Pension Credit

Budgeting and cutting costs

If you really want to make an impact and feel the other support options wouldn’t be ideal for you, There’s other options to consider starting with your own income. We have guides on saving and budgeting: