What Happens When You Miss Mortgage Payments?

When you purchase your first home—although it’s an incredible feeling and you’ve worked so hard to do so—mortgage payments are unfortunately something mandatory that needs to be paid every month. 

Most adults in their lives will experience this, and missing just a couple of payments can have pretty serious consequences, but what exactly happens?

That’s what we’re going to look at in detail in this blog, so you can take note if this was to ever happen unexpectedly.

‍

What Happens if You Miss a Mortgage Payment?

A shortfall equivalent to two or more months’ repayments means you are officially in arrears. 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. 

This is typically, step-by-step what happens if you miss a payment:

1. Your lender will try and call, email, or text you, updating you on the situation
2. 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
3. It won’t lead to repossession of your household right away, but action as soon as possible.

‍

Missing just a couple of payments can have pretty serious consequences, but what exactly happens?

‍

Do’s and Don’ts When You Miss a Mortgage Payment

Here are some of the vital things you should and shouldn’t do if this ever happens to you:

‍

Do’s 

• DO speak to your lender, as 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.

• Be honest about your financial situation, no smoke and mirrors, just tell them exactly what’s going on

• 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.

‍

Don’ts 

• 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.

• Avoid any conversation, letters, emails, or phone calls you receive from your lender

• Don’t take out new loans with less reputable lenders; speak to yours

• Avoid prioritising other debts first, as this is considered a priority debt that must come first

‍

What Are 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.

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.

‍

What are the Consequences if You Miss a Mortgage Payment?

If you miss a mortgage payment (or multiple mortgage payments), here are some of the consequences you could face:

• You’ll be given late fees and pay extra interest on the missed amount, which can add up
• Missed mortgage payments can lower your credit score
• It can make it difficult to secure credit cards, new loans, or even a new mortgage in the future
• You may fall into arrears
• Your lender could start taking legal action (default)
• In the most severe cases, you could lose your home (repossession)

‍

Note: Your lender will always try to find a solution to these problems before taking legal action or repossessing your home, so please make sure you’re responsive and take full responsibility during this process.

‍

What to Do if You Can’t Afford Your Mortgage Payments?

If you can’t afford your mortgage payments, the best thing you can do is speak to your lender right away. They will typically reach out to you within 15 days anyway. During this time, make sure to be responsive with your lender, and if you want extra support, you can always get free debt advice from charities such as the National Debtline and Citizens Advice. 

Combining both your lender and free debt advice will give you the best chance of coming up with a solution and getting these missed payments sorted out as quickly as possible. No one wants to go through this, but never be ashamed to reach out, as they deal with this stuff every day!

‍

Moving Forward With Your Mortgage

It’s important during this time to remember that there is a solution and that it can be fixed. As we said earlier, burying your head in the sand isn’t going to make the situation any better, and you’re simply going to have to stand this up and get all the help you can.

If you want to get in contact with our mortgage brokers today for a free, no obligation chat for our opinion on the matter, we’re always here to help you, in the good and bad. Call us on  0161 791 4757 or use the contact form on our website!

Disclaimer: 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.

‍