Government help if you can’t pay your mortgage
If you’re struggling to meet your mortgage repayments there’s a range of government schemes that offer help. These include the Mortgage Rescue scheme, Support for Mortgage Interest, and other government benefits that might boost your income.
- Contact your lender first
- Get free advice
- Mortgage Rescue scheme
- Support for Mortgage Interest
- Help with mortgage payments under Universal Credit
- Benefits that might increase your income
- Budgeting and cost cutting tips
Contact your lender first
To find out how much you can afford to borrow use our Mortgage affordability calculator.
If you are having trouble paying for your mortgage, your first step should always be to contact your lender.
They want to help you to meet repayments.
Your lender is able to discuss your options with you and can offer suggestions, including:
such as temporary payment arrangements, lengthening the term of your mortgage or, in some circumstances, switching temporarily to interest-only repayments.
Get free advice
If you’re anxious about being unable to meet repayments, there are plenty of advice services which provide guidance for free.
These include Shelter, National Debtline and StepChange Debt Charity.
Mortgage Rescue scheme
This scheme is no longer available.
The Welsh Government runs a Mortgage Rescue scheme operated through councils and housing associations with the aim of preventing owner-occupiers becoming homeless.
If you’re considered for the Mortgage Rescue scheme, the council will put you in touch with a housing association.
After assessing your property and your particular financial circumstances, they could either buy a stake in your home (making you a part owner) or buy the property completely and rent it to you.
Renting would make you a tenant of the housing association.
You will only be considered for the Mortgage Rescue scheme if you’ve approached your local authority for help to prevent you and your family becoming homeless.
The Scottish Government provides some support to home owners struggling to pay their mortgage through its Home Owners’ Support Fund.
The fund operates two schemes which home owners could apply for:
- The Mortgage to Rent scheme where a social landlord buys your home and rents it back to you.
- The Mortgage to Shared Equity scheme where the Scottish Government buys up to a 30% stake in your home, which reduces how much you owe on your mortgage. You continue to live in your home but make lower mortgage repayments as a result.
Support for Mortgage Interest
If you’re on certain benefits such as:
- Income Support
- Income-based Jobseeker’s Allowance (JSA) or,
- Income-related Employment and Support Allowance
and are struggling to pay your mortgage, you might be able to get help towards mortgage interest payments called Support for Mortgage Interest (SMI).
If you qualify, you can get help towards interest payments on a mortgage of up to £200,000 following a 39-week waiting period after you’ve claimed your benefit.
If you are on Pension Credit you might be able to get help immediately, but only for a mortgage up to £100,000.
SMI is normally paid direct to your lender.
The money is only to cover interest and Support for Mortgage Interest is calculated using a standard interest rate.
There is no help available for capital payments.
If you’re claiming JSA, you can only get SMI for up to two years.
If you get Income Support, income-related Employment and Support Allowance or Pension credit, there’s no limit to how long you can claim SMI.
SMI stops when your other benefits stop, usually when you go back to work.
However, you could apply for the Mortgage Interest Run On (MIRO) to tide you over for up to four weeks until you can resume full repayments from your salary.
MIRO will pay out the same amount as SMI, but it’s paid to you instead of your lender.
Under government proposals, from April 2018 all existing and new SMI payments will be made as a loan and you’ll pay interest on it.
You will have to repay the loan either when you sell your house or voluntarily when you’re able to (for example when you return to work).
Help with mortgage payments under Universal Credit
If you’re getting Universal Credit and you’re struggling to pay your mortgage, you might be able to get help with your interest payments.
You will only qualify for this if you have no ‘earned income’, such as pay from part-time or full-time work, and you don’t get any benefits from your employer such as Statutory Sick Pay or Statutory Maternity Pay.
If you do qualify for help, the payments will usually be made direct to your mortgage lender and will be based on a set rate of interest applied to the amount you have outstanding on your mortgage (up to a maximum of £200,000).
You start to get this after a 3-month waiting period and the payments will stop as soon as you start work again, even if you’re only earning a small amount.
Benefits that might increase your income
It’s worth checking if you’re entitled to benefits to help boost your income to meet mortgage payments.
Budgeting and cost cutting tips
Check your income and outgoings with our Budget planner to help you.
Follow the links below to work out your monthly income and outgoings and to see if there are any cost cutting tips you could use to help free up cash at the end of each month. Every little will help.