Can the Government Help if I Can’t Pay My Mortgage?
Falling behind on your mortgage payments can be stressful, especially if the word repossession comes into play. However, what many people don’t realise is that there are a range of government support schemes available to help take the pressure off when you need breathing space.
Undoubtedly the first port of call if you cannot pay your mortgage should be your lender. As their client they want to help you meet your mortgage repayments, so keeping them in the loop at the first sign of trouble and being completely transparent is key. Often, they will switch you to temporary interest only repayments, lengthen the term of your mortgage or allow you a repayment holiday. These options are available to help you get out of mortgage arrears and back on track financially.
Help paying your mortgage
In short, the government simply aren’t going to pay your mortgage because you cannot. However, if you are in danger of losing your home there are ways in which you could receive extra help until you are back in control again.
Support for Mortgage Interest
If you receive one of the following UK benefits you could be eligible for Support for Mortgage Interest (SMI):
- Pension credit
- Income support
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
If you are entitled to SMI the government will pay the mortgage interest for you on the first £200,000 of your outstanding mortgage. This will only continue whilst you cannot afford your mortgage repayments.
If you apply for an income-related benefit your eligibility for SMI will be automatically calculated and the interest of your mortgage will be paid until you stop receiving benefits.
The money the government loans you to pay the mortgage interest is not free. You will need to pay the state back the amount they paid into your mortgage when you sell the property. You will also be charged 2.61% compound interest. Please note that the interest rate is subject to change.
SMI will not help you pay any mortgage arrears.
Mortgage Interest Run On
SMI will be halted when you return to work or start working enough hours to cover payments. However, to aid with the transition the government allow individuals to claim Mortgage Interest Run On (MIRO), which lasts for four weeks. MIRO is paid directly to you instead of your lender.
Free mortgage advice
Not everyone is entitled to government help, and for some having your interest paid simply isn’t enough. What happens to those of us who are struggling without any aid? There are a number of non-profit companies dedicated to helping individuals who are in any kind of debt, including mortgage arrears. Utilising the expertise of these companies can also help with quashing repossession orders and court summons as they act as proof you have been trying to rectify the situation.
|National Debtline||0808 808 4000|
|StepChange Debt Charity||0800 138 1111|
|Citizens Advice||Find your local CAB office|
|Christians Against Poverty||01274 760720|
Is Mortgage Payment Protection Insurance worth it?
Government support is minimal and not everybody is eligible. For peace of mind, many people take out Mortgage payment protection insurance (MPPI) for protection. MPPI ensures your repayments will be made if you:
- Are made redundant
- Are unable to work due to sickness
- Are unable to work due to an accident
MPPI is unlikely to be granted if you are already struggling to pay your mortgage; people take out policies as a way of protecting their payments in case the worst happens. Furthermore, if you are struggling and still in work, MPPI will not pay out.
Stop repossession due to mortgage arrears
If repossession is becoming a likely outcome try and pay your lender some money towards your arrears. Sometimes your lender will let you make smaller monthly repayments of a sum you can afford for a period of time. However, sometimes it is simply too late and repossession is inevitable.
If you are in the process of having your home repossessed get in touch with us immediately to stop from losing your home. We offer a no fee solution for anyone who is facing repossession. Simply fill in our online enquiry form or call 0800 020 9600 today and one of our experts will be able to give you the advice and help you need.