This document provides guidance for homeowners who are unable to meet their mortgage repayments. It outlines key steps to take such as speaking to your mortgage lender as soon as possible, getting money advice from specialist agencies, and paying what you can afford even if it's not the full amount due. The document also discusses potential financial help options from insurance policies, state benefits, and government schemes. It answers common questions about the complaint process and legal actions. The overall message is to act now, explore all available options for assistance, and avoid rash decisions like taking on more debt without advice.

1. April 2010
Our
here to help you
guides –
No selling.
This guide is part of our Buying a home series.
No jargon.
Just the facts
No selling. No selling. No selling. No selling. No selling.
No jargon. No jargon. No jargon. No jargon. No jargon.
Pensions andEveryday Saving and If things Buying a
retirement. money. investing. go wrong. home.
about problems
paying your
Available from our helpline or website
www.moneymadeclear.org.uk
© The Consumer Financial Education Body Limited. April 2010 CFEB ref: COMS0007bH
No selling. No jargon. Just the facts. mortgage.
If you would like this guide in Braille, large print or
audio format, please call our Moneymadeclear helpline
on 0300 500 5000 or Typetalk on 1800 1 0300 500 5000.
(Calls should cost no more than 01 or 02 UK-wide calls, and are
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2. Moneymadeclear guides are brought to you by
the Consumer Financial Education Body (CFEB). This guide is
We aim to help you understand financial matters
and manage your money better. for you if
Just the facts You are Contents
about problems unable to meet your
mortgage repayments.
Act now 2
paying your It’s about getting out of
Key things to think about 5
mortgage. arrears and:
• explains what you can do;
Your questions answered 9
• ets out what help is
s
We try to ensure that information in this guide, much of which comes from external Next steps 10
sources, is correct at time of print. It is possible that some of it is oversimplified, or may
available; and
become inaccurate over time, for example because of changes in UK law. You should • nswers some of the
a
always check the current position before you take action. Jargon buster 11
questions you may have.
This is general information intended for consumers of UK financial services resident in
the UK. It does not take account of individual circumstances. When making decisions 12
Useful contacts
about your own circumstances you should consider whether to consult a financial or
other professional adviser.
www.moneymadeclear.org.uk 1

3. Act
now
If you’re having trouble or think to consider your circumstances, and Work out a budget
you may have trouble making will have procedures for dealing with Key points
List your income and your spending.
cases like yours. Find out if they can
your mortgage repayments, This will help you work out where
give you any help – see page 6.
contact your mortgage lender your money is going, and plan for the
future. Advice agencies may be able • peak to your mortgage
S
as soon as possible to discuss
Get money advice to help you with this or you can use lender – tell them what you
your difficulties.
Some advice agencies specialise in our online Budget calculator at are doing and find out if they
They need to know if there are specific www.moneymadeclear.org.uk.
money problems – they can give you can help – see page 6.
reasons why you cannot or may not be Use this plan to help you pay all
free and independent advice to help • et advice from a specialist
G
able to make your mortgage payments. your essential bills first, such as your
you plan and solve your problems –
See the Jargon buster on page 11 see Useful contacts on page 12. mortgage, utility bills (electricity, gas, agency.
for an explanation of some words you water), insurances, council tax and
• Pay what you can.
may come across. housekeeping.
For information about mortgages, get Key points
our Mortgages guide – see Useful Pay what you can
contacts on page 12. Even if you can’t pay the full amount,
• mortgage is a loan secured
A you should try to pay as much of
against your home, so if your mortgage payments as you can
Things to do you can’t repay it and you afford. This shows your lender you are
willing to make an effort to pay, and
Speak to your mortgage get into arrears, the bank or may increase your chances of keeping
lender building society can sell your your home. Your lender should be
Let them know why you can’t pay your
home to get back its money. willing to talk to you about accepting
less than the full monthly payments for
mortgage and tell them what you are • f you fall behind in your
I
doing. All mortgage lenders regulated a time. Speak to them and see what
payments, the money you you can agree.
by the Financial Services Authority (the owe is called ‘arrears’.
UK’s financial services regulator) have
2 www.moneymadeclear.org.uk 3

4. Things to avoid
Taking out a loan to pay
Key points
Key things to
your debts
Think seriously before taking out a
loan to cover your repayments. These
loans can be very expensive and are
• etting another loan to pay
G
your debts may not solve the
problem.
think about
often also secured on your home, • ou’re still responsible for
Y
putting it at greater risk. If you’re
paying your mortgage if you
thinking about getting a further loan,
speak to one of the advice agencies hand your keys back to the Financial help If you claim Income Support or
Jobseeker’s Allowance, your local
listed in Useful contacts on page 12. lender.
Jobcentre Plus office will normally
• ou’ll still have to pay any
Y You may be able to get some financial give you some help with your
help through insurance or State benefits.
Handing back the keys outstanding shortfall if the mortgage repayments.
Think carefully if you can’t afford your lender repossesses your How much help you get and when it
Insurance
mortgage and want to give the keys home and sells it. starts depends on when you took out
back to your mortgage lender so they If you can’t pay your mortgage because your mortgage and how long you’ve
• pecialist advice agencies
S your income has fallen, you should been receiving Income Support or
can sell the house. Until it’s sold you
will still be responsible for paying the can help you sort out your check whether you have any mortgage Jobseeker’s Allowance.
mortgage. If your house sells for less debts. payment protection insurance.
Even so, these extra benefits will only
than you owe, your mortgage won’t If you do, find out if your policy covers help to pay the interest part of your
be fully repaid and you’ll have to pay your circumstances and make a claim loan, and they are paid at a rate set by
the shortfall. The lender can start right away. the government.
chasing you for this at any time up to If your claim is refused, and you don’t
six years after the sale (five years in If you or you partner are 60 or over,
agree with it, you may be able to take you may be entitled to Pension
Scotland). Your name will also be on your case to the Financial Ombudsman
the repossession register and it will be Credit. You may get an extra amount
Service – see Useful contacts on to cover your mortgage interest
harder for you to get a mortgage in page 13.
future. Get advice first. payments. To find out more, get
a copy of the Pension Service’s
Government help booklet – see Useful contacts on
You may be able to claim some page 13.
benefits to increase your income. Make sure you claim any tax credits
Contact your local Jobcentre Plus you’re entitled to – see Useful contacts
office (details in the Phone Book) or on page 13.
speak to an advice agency – see
Useful contacts on page 12.
4 www.moneymadeclear.org.uk 5

5. Things you can Your monthly payments will increase
because of this. Your mortgage lender
For an interest-only mortgage, Other government
you can also consider:
do to pay off your is unlikely to agree to this if you’ve
• Taking a payment holiday
help
mortgage arrears failed to stick to revised repayment
arrangements in the past, or if the For example, if your mortgage is linked Homeowners Mortgage
balance of your mortgage, including to an endowment policy and you can’t
You could think about any of the Support
the cost of the arrears, comes to more afford both sets of payments (the
following: than the house is worth. interest payments on the loan and the You may qualify for Homeowners
payments towards the endowment Mortgage Support if you’ve had
Start repaying your arrears as Extend your mortgage period policy), you could ask the endowment a temporary, unexpected drop in
soon as you can policy company if you can stop paying income and you’re unable to meet
If you have a repayment mortgage your mortgage payments. Speak to
Arrears can often lead to extra the endowment policy for a while. You
and you’ve been paying it back for a your lender or a free and independent
charges, so will increase the amount will have to arrange with them how
while, you could ask your mortgage advice agency to find out if you qualify
of money you owe. Paying them to make up the backlog of payments
lender to extend the remaining for this scheme – see Useful contacts
off quickly may mean you have less once you restart your policy.
term. This will reduce your monthly on page 12.
money for a short time, but it will be payments, but you will be making • ashing in or selling your
C
cheaper in the long run. them for longer – perhaps into your endowment policy
Mortgage Rescue Scheme
retirement. Also, you will be paying If your endowment policy has been
Make extra payments more for your home overall. running for several years, it may You may qualify for a government-
have built up a reasonable amount backed mortgage rescue scheme
You can pay off your arrears by paying a This extension is more difficult to
that you could use to pay off your if you’re having serious difficulties
bit more each month than your monthly arrange if you have an interest-
arrears. This would mean cashing in paying your mortgage and will become
mortgage payments. Just make sure only mortgage and are using an
or selling the policy. homeless if your home is repossessed.
you can afford the extra amount. Even endowment policy, PEP or ISA to pay
This scheme may arrange for you to
if your mortgage lender doesn’t think off the loan. If you did this, you would have to take sell your home to a social landlord and
you’re offering enough, pay the extra out a repayment mortgage, or find stay there as a tenant. Advice agencies
amount anyway. Tell them why you can Ask to delay paying your some other way to make sure you can help you work out if you qualify –
only afford this much – they may not be arrears repaid the money you borrowed. see Useful contacts on page 12.
aware of your circumstances.
If you can now manage to meet your Before you cash in an endowment
Add the arrears to the monthly payments, but can’t afford to
pay anything towards the arrears, you
policy or change to a repayment
mortgage, you will need to speak
As a last resort
mortgage could ask your mortgage lender if you to your mortgage lender and the
If you can’t afford your mortgage
You could ask your mortgage lender can delay paying arrears for a time. endowment company.
payments and you think this situation
to consider ‘capitalising’ your arrears. If you cash in your policy early, won’t change in the long term, you may
This means adding them to your total the value of your policy might be think about selling your home yourself.
mortgage balance, spreading the considerably reduced. You should think
arrears over the remaining period of However, before you do this, think
carefully before you do this, and first
your mortgage. carefully about where you will live.
ask your endowment provider how
You may not get help from your local
much you would get.
6 www.moneymadeclear.org.uk 7

6. Your questions
council with finding a place to live if Make sure you deal with a regulated
they think you have made yourself firm so you will have access to
intentionally homeless. complaints procedures if things go
answered
wrong. Check the FSA Register to
Selling your home and see if a firm is regulated or go to our
renting it back website for more information – see
Useful contacts on page 12.
Some companies offer to help you
if you get into financial difficulties with Think carefully before choosing this
your mortgage payments by buying option and make sure you understand
your home and renting it back to the consequences. If you’re unsure,
talk to a free and independent money
you for a fixed term. They can buy Question Question
your home quickly, sometimes within adviser – see Useful contacts on page
a week, but more usually between 12. For advice on how it may affect
three to four weeks. You may hear your right to Housing Benefit, contact What should I do if my lender How do I make a complaint?
them called ‘rent back’ or ‘sell-to-let’ your local council – see Useful contacts takes me to court?
schemes. on page 13. Read the Department for Answer
Work and Pensions’ guide Advice for Answer
Selling your home in this way may If you feel your mortgage lender or
homeowners – sale and rent back. It
allow you to clear your debts and stay Don’t ignore the paperwork you are insurance company is not dealing with
is available online, or you can ask your
in your home. But watch out as: sent. Get advice from the agencies your case fairly, ask them for a copy
local council to print it out for you.
listed in Useful contacts on page 12. of their internal complaints procedure.
• ou will normally be paid less than
y
This should tell you how to get things
the full market value of your home; Even if a lender starts court
sorted out quickly and easily.
• ou should check how long you
y proceedings, you won’t automatically
lose your home. The lender must If you’re not happy with the answers,
can stay in your home as your Key points continue to look for ways for you to you may be able to take the matter to
rental agreement may not be
pay your mortgage, so you should the Financial Ombudsman Service –
renewed, so you could still have to
• ou may be covered by an
Y continue talking to your lender and see Useful contacts on page 13.
leave after the fixed term ends;
insurance policy for your paying as much as you can. You can also find useful tips about
• ou could still be evicted if you
y
mortgage repayments. If you are asked to go to court, making a complaint in our Making a
breach the terms of your tenancy, for
a money adviser from one of the complaint guide – see Useful contacts
example if you fall behind with your • ou may be eligible for help
Y agencies listed in Useful contacts (on on page 12.
new rental payments; and
from the State if you’re page 12) will be able to help you. They
• if the person or firm buying your home receiving benefits. can help prepare your case and may
gets into financial difficulties, the be able to represent you. Make sure
property could still be repossessed • ou can discuss the
Y
you go to the court hearing.
and you might have to leave. different options with your
The Financial Services Authority (FSA) mortgage lender.
regulates the sale of these schemes.
8 www.moneymadeclear.org.uk 9

7. Next Jargon
steps buster
Some key words and phrases Mortgage
explained. A loan secured on your property.
If you don’t keep up the mortgage
Step 1 Step 3 Arrears repayments, your home may be
Money you owe when you fall behind repossessed.
on your loan or rent repayments.
Speak to your mortgage lender as Work out your budget and pay as
soon as possible to see if they can much of your mortgage as you can Mortgage lender
Endowment policy The company you take out your
help – the sooner you act the better. each month.
An investment plan that you usually mortgage with.
Discuss your options with them and pay into each month, which pays a
find out which one may be best for you. lump sum when it matures.
Personal equity plan (PEP)
A way of holding investments that
Step 2 Step 4 Individual Savings Account is sometimes used to pay off a
(ISA) mortgage. You cannot get a new PEP
A tax-efficient way of saving or now. All PEPs automatically became
Talk to a money advice agency if you Check whether your repayments are investing, with limits on how much you stocks and shares ISAs from 6 April
need help sorting out your debts covered by any insurance policy you can pay in each tax year. 2008.
– they offer a free service. have or whether State benefits may
help.
Interest-only mortgage Repayment mortgage
A mortgage in which you pay only A mortgage in which you pay off the
the interest charges of the loan each loan amount (capital) and interest at
month. You are not reducing the loan the same time.
Don’t panic – specialist amount (the capital), and you must
advice agencies can help you repay this in some other way at the
Term
sort out your debts and plan end of the term.
The length of your mortgage, normally
your spending. stated in years.
10 www.moneymadeclear.org.uk 11

8. Useful
Consumer Credit Counselling Business Debtline
Service (CCCS) 0800 197 6026
0800 975 9558 www.bdl.org.uk
contacts
www.cccs.co.uk Free, confidential and independent
Offers a structured programme of advice advice for self-employed people and
on how to manage your money. small businesses.
Credit Action
Other helpful contacts
0800 138 1111
www.creditaction.org.uk Local council
Works in partnership with the CCCS Your local council can advise you if
Consumer Financial Education Body • Mortgage calculator to help you
a and publishes factsheets about debt you’ll qualify for Housing Benefit if you
estimate your monthly mortgage and budgeting. want to enter into a sale-and-rent-
To order other Moneymadeclear back scheme. Look in your Phone
payment.
guides, or for general information Book for details.
Consumer Direct
or guidance Call rates may vary – check with 0845 404 0506
Helpline: 0300 500 5000 your telephone provider. www.consumerdirect.gov.uk Jobcentre Plus Office
Typetalk: 1800 1 0300 500 5000 Does not provide debt counselling, Your local office can tell you if you are
Financial Services Authority (FSA)
(Calls should cost no more than 01 or 02 but can give advice when a creditor or eligible for any State benefits – look in
Consumer helpline: 0845 606 1234
UK-wide calls, and are included in inclusive debt collector is acting unlawfully. your Phone Book for details.
mobile and landline minutes.)
Minicom/Textphone: 08457 300 104
www.fsa.gov.uk Financial Ombudsman Service
Money Advice Scotland
Other Moneymadeclear guides To check the FSA Register, or to 0141 572 0237 South Quay Plaza
report misleading financial adverts www.moneyadvicescotland.org.uk 183 Marsh Wall
• Getting financial advice
or promotions. Provides details of advice agencies London E14 9SR
• Making a complaint 0300 123 9 123 or 0845 080 1800
throughout Scotland that offer a free,
• Mortgages independent, impartial and confidential www.financial-ombudsman.org.uk
Other organisations that can help
For more titles, call us or go online you if you have money problems advice service.
The Pension Service
www.moneymadeclear.org.uk Order line: 0845 731 3233
Advice UK National Debtline
020 7469 5700 0808 808 4000 Minicom/textphone: 0845 604 0210
On our Moneymadeclear website www.direct.gov.uk/pensions
www.adviceuk.org.uk www.nationaldebtline.co.uk
you can find For a Pension Credit booklet.
All members provide free and confidential Provides a free, confidential and
• Budget calculator to help you
a advice, but not all provide money advice. independent telephone advice service.
work out if you have enough money Directgov
coming in to cover your bills; Citizens Advice Bureau (CAB) Payplan Tax credits helpline: 0845 300 3900
www.adviceguide.org.uk 0800 280 2816 Minicom/Textphone: 0845 300 3909
• Cut-back calculator to help you
a www.direct.gov.uk/money
see where you can save money on Offers fee, confidential and face-to-face www.payplan.com
money advice. Look in the Phone Book Free confidential advice on debt For information about tax credits.
items you buy regularly;
or on its website for your local bureau. problems.
12 www.moneymadeclear.org.uk 13