Missed mortgage payments

Missed your mortgage payments? Or worried you might do so in the future? We take a look at your options.

Missed your mortgage payments? Or worried you might do so in the future? We take a look at your options.

Daniel Evans
Mortgages expert
3
minute read
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Posted 2 JANUARY 2020 Last Updated 25 FEBRUARY 2022

What happens if I miss a mortgage payment?

If you miss a mortgage payment, then your mortgage is considered to be ‘in arrears’. Ideally, you should contact your lender to let them know you’re having difficulties before you get to this point, but if you do miss a payment it’s vital to talk to your lender as soon as possible.

Meanwhile, even if you can’t pay the full amount, it’s important to make any repayment that you can afford.

Your mortgage is secured on your home and, if you don’t repay the loan, your lender has the right to take your home through a legal process called repossession. However, taking you to court and repossessing your home is seen as a last resort and your lender can only do so after all other reasonable attempts to resolve the situation have failed.

What options might my lender offer?

Your lender is obliged to treat you fairly if you’re in arrears. Options they might agree with you could include:

  • Paying just the interest on your mortgage – if you have a repayment mortgage, you might be able to just pay the interest for a set period. It’s likely you’ll need to pay something towards the arrears too.
  • Extending the term of your mortgage – this could lower your monthly repayments to a more affordable level.
  • Adding the arrears to your mortgage – if your home is worth a lot more than your mortgage, you might be able to add your arrears to the total amount you owe so you can spread the cost. This is likely to be a last resort and your monthly payments will go up if you agree it.
  • A mortgage payment holiday – this is a break from paying your mortgage for a set period. A payment holiday isn’t usually available if you’re already in arrears, but you may be able to negotiate one if you’ve only missed a single repayment.

Can I get help from the government to pay my mortgage?

Some homeowners can get support from the Government through its Support for Mortgage Interest (SMI) programme. The Government offers loans – paid directly to the lender – to help you pay the interest on your mortgage. To be eligible, you’ll need to receive one of the following:

  • Income Support
  • Income-based Jobseeker’s Allowance (JSA)
  • Income-related Employment and Support Allowance (ESA)
  • Universal Credit
  • Pension Credit

There are various conditions and exclusions – for instance, the loan doesn’t cover your mortgage repayments, only the interest. And it won’t cover payments already in arrears, so it’s something you’ll need to plan for in advance. Check the Government’s website for details. And be aware that you’ll need to repay the loan with interest when you sell your home.

If you’re in Scotland, the Homeowners’ Support Fund may be able to help you.

Where else can I get help with my finances?

If you have mortgage protection insurance, you’ll be able to pay your mortgage if you lose your job or fall ill, and can no longer earn a living. But many policies will only pay out for one year. If you don’t have this type of cover, check with your lender to see what support they can provide.

MoneyHelper can point you to sources of free debt advice.

Frequently asked questions

Will missing a mortgage payment affect my credit rating?

In all likelihood, yes. If you miss a mortgage payment, your lender is likely to pass this information along to credit reference agencies like Experian and TransUnion, who will downgrade your credit rating.

How long will a missed mortgage payment affect my credit rating?

According to Experian, a global credit reference agency, if a late payment is recorded on your credit history, it will stay there for six years. However, you should find its impact lessens as time goes on, as lenders tend to pay closest attention to your recent credit history.

When will late mortgage payments appear on my credit report?

Lenders tend to report to credit agencies at the end of each month. So, if you’re able to make your payment within a few days or weeks, let your lender know as they may be able to prevent the missed payment appearing on your credit file.

Do mortgage payments have a grace period?

There may be a grace period - in which you can make a late payment without a penalty - written into your contract, but you’ll have to check this with your lender. This is why it’s important to contact your lender immediately if you think you’ll have problems paying, as you may be able to negotiate a solution.

Can I take a repayment holiday?

If you’re having temporary financial difficulties, you might be able to arrange a mortgage holiday with your lender. However, this will appear on your credit report and could affect your credit score. You’re unlikely to be able to get a repayment holiday if you’re already in arrears.

Tips to avoid late mortgage payments

There’s a few ways you can avoid making late payments on your mortgage or bills:

  • Set up a standing order or direct debit, so the payment is made automatically.
  • Set aside a time each month to go through your bills and finances.
  • Make sure you claim any benefits you’re entitled to if your hours of work are cut or you lose your job.

How to recover from the effects of a missed mortgage payment

To repair your credit rating after a missed mortgage repayment, make sure you stay on top of your bills and other payments. And look at your credit utilisation ratio – the amount of credit available to you that you use – to see if you can reduce it.

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