repay your mortgage? What to do? – II

This is part II of the article Can’t repay your mortgage? What to do? – I. Please read the article from part I before continuing with this part.


Things you must to avoid if you cannot pay your mortgage

■ Loans to repay debts

Think long and hard before taking out a loan to repay your debts. Such loans are often very expensive and secured on your home – putting it at greater risk if you can’t keep up the payments. If you are thinking about taking out a further loan, get advice from one of the agencies mentioned on contacts links.

■ Handing back the keys

If you can’t afford the mortgage and want to hand back the keys to the mortgage lender, think carefully. You are still liable for the mortgagee until the property is sold. Often, empty properties sell for less than their market value.

This could mean that your mortgage is not repaid in full and the lender may still pursue you for any outstanding balance – they can do this for up to six years after the sale (five years in Scotland). Your name will be on the repossession register – making it harder to get a mortgage in the future. Seek advice first.

Is any financial help available?

■ Insurance

If you can’t meet your mortgage payments because of a loss of income or your income has fallen (perhaps because you’re on long-term sick leave), you should check whether you have any mortgage payment protection insurance.

If you do, check whether your policy covers your specific circumstances and make a claim straightaway. If your claim is refused, and you don’t agree with the refusal, you may be able to take your case to the Financial Ombudsman Service – see Useful contacts .

The Financial Ombudsman Service provides consumers with a free, independent service for resolving disputes with financial firms.

■ Benefits

There may be benefits you could claim to increase your income – contact your local Jobcentre Plus office (details in the phone book) or an advice agency for information.

■ If you claim Income Support or Job Seeker’s Allowance, the local Jobcentre Plus office will usually provide some help with your mortgage payments. How much you get and when it starts will depend on when you took out your mortgage and how long you have been receiving benefits. The local Jobcentre Plus office can help only with interest payments and these will be paid at a rate set by the government.

■ If you, or your partner are aged 60 or over you may be entitled to Pension Credit. In certain cases you could get an extra amount of Pension Credit to cover mortgage interest payments. To find out more see the Pension Service’s website at www.thepensionservice.gov.uk or get a copy of the leaflet PC1L Pension Credit from your Post Office.

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