Missing just a couple of payments can have pretty serious consequences, but what exactly happens?
A shortfall equivalent to two or more months’ repayments means you are officially in arrears.1
A failure to pay your mortgage will trigger a report by your lender to the major credit bureau and they could lower your credit score, which will make it more challenging to seek credit elsewhere. After your grace period (this is usually one week to fifteen days after the payment due date) a late fee will be added on to the payment you failed to make.
Your home may be repossessed if you do not keep up repayments on your mortgage.
What to do, and what not to do
The most important thing is not to stick your head in the sand. Talk to your lender as soon as you think you may have some difficulties. If you fall behind your mortgage payments by 90 days, this is considered as defaulting on the loan, and your lender can start proceedings to repossess the property, however there are avenues of assistance that can prevent you reaching this stage.
By speaking to your lender, you may be able to make a plan for the payments you owe, or even to create a forbearance agreement with your lender, to allow a short-term solution to catch up on your payments.
We recommend that as well as speaking to your lender if you are struggling, please do not hesitate to reach out to us and let us know if you have any challenges, we can take a look at your specific circumstances.
Your lender’s obligations
Within 15 working days of falling into arrears, your lender must:
- Tell you how much your arrears add up to
- List the missed payments
- Explain how much is outstanding on the mortgage
- Outline any charges
Your lender must then treat you fairly by considering any requests about changing how you pay, perhaps with lower repayments for a short period.
Any arrangement you come to, the FCA points out, will be reflected on your credit file – affecting your ability to borrow money in the future – as will any missed payments.1
Your lender might also suggest or allow you to extend the term of the mortgage or let you pay just the interest for a certain period of time.
If in doubt, please do get in touch with us as well as your lender if you think you may be struggling, help is at hand.
For additional assistance, you can also visit the Citizens Advice website which contains further detail about what to do – https://www.citizensadvice.org.uk/debt-and-money/mortgage-problems-debt-and-money/
Sources
- BBC News (2023) Mortgages: What happens if I miss a payment? Available at https://www.bbc.co.uk/news/business-63486782 [Accessed 25 Apr 2023]
All the information in this article is correct as of the publish date 27th April 2023. The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.
