Reducing your monthly mortgage payments

If you're finding it hard to pay your mortgage, you might be able to:

• reduce your household costs or increase the money you have coming in

• switch to a cheaper mortgage deal

• reduce your mortgage payments

• reduce payments on a shared ownership property

• change payments on your endowment policy

The cost of living crisis is making it hard to find new mortgage deals at the moment. This means you might not be able to save money by making changes to your mortgage.

You should look at your household budget regularly to see if you can save money in other ways.

If you’ve already missed mortgage payments

You must take action quickly to stop yourself from falling into debt. 

If your lender thinks you’re not dealing with your debt, they’ll take action through the courts. This could lead to you losing your home.

Check how to deal with your mortgage debts.

Look at your household budget

You should check:

• what money you have coming in

• how much you’re spending

Work out your household budget on the National Debtline website.

You might be able to save money on your home insurance by switching to cheaper mortgage protection, buildings or contents insurance. 

Check how to find insurance on the MoneyHelper website.

If you don't have enough money to live on

You might be able to get benefits or help from a government grant. Check what help you can get with the cost of living. 

You might also be able to get help with bills like your council tax. Check what help you can get with your bills.

Switching to a cheaper mortgage

It might be difficult to find good deals on mortgages at the moment. If you don’t find a better contract than the one you’re on it’s probably better to wait until deals are available again before switching your mortgage lender.

If you decide to switch to another mortgage lender, you might have to pay some charges. 

If you leave your contract early, your current lender might charge you a ‘redemption fee’. If you’re not sure how long your contract is, ask your lender or check your mortgage contract.

You should also ask your new lender if they’ll charge you for setting up and arranging your new mortgage. 

If you're behind with your payments, you'll also have to pay off any money you owe to the first lender.

Check what to consider when switching your mortgage on the MoneyHelper website.

If you have a fixed rate mortgage

Make sure you know when the fixed rate period ends. Find out what deal your lender will offer you a few months before your fixed period is due to end. 

If you don’t get a new fixed rate deal, you’ll be moved onto a variable rate contract. This means your monthly mortgage repayments will go up if interest rates go up. 

If you’re moved onto a variable rate contract, not all lenders will drop their rates if interest rates fall. Check your contract or ask your lender what they'll do if this happens.

You should check you’ll be able to afford a mortgage if interest rates go up. You can use a mortgage calculator to enter interest rates that are 1% or 2% higher than they are now. Use the mortgage calculator on the MoneyHelper website.

Reducing your monthly mortgage payments

You could ask your mortgage lender if they’ll reduce your monthly mortgage payments - this is usually for a short amount of time. 

Depending on the type of mortgage you have, you might be able to:

• reduce your monthly interest payments - your lender will probably only agree to this if your property is worth more than what you owe

• change to an interest-only mortgage

• reduce or stop repayments temporarily

• pay your mortgage back over a longer period of time - this would mean you pay more interest in the long term

If a debt has already built up, you’ll need to find a way to pay the debt as well.

Check how to make changes to your mortgage and deal with mortgage debt

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Before you agree to make any changes to your mortgage, ask your lender if there will be a charge for this, and how much it will be. For example, your lender could charge a fee for:

• ending your fixed term mortgage before the agreed date - this is known as a ‘redemption fee'

• changing the terms of your mortgage - this is known as an ‘administration charge’

If the charges seem very high, you should get advice from an adviser.

If you're up to date with your mortgage payments

Most lenders are signed up to an agreement called the ‘Mortgage Charter’. 

If your lender is signed up to the charter and you’re up to date with your mortgage payments, they must give you the option to either:

• switch to interest-only payments for 6 months

• extend your mortgage term to reduce your payments - you should have the option to switch back to your original term within 6 months

You can check if your lender is signed up to the Mortgage Charter on GOV.UK.

If you have a shared ownership or shared-equity property

If you own your property through a shared ownership scheme, you’ll usually make both:

• a monthly payment towards your mortgage

• a rent payment to a landlord - usually a housing association, or other kind of social landlord

If you own your property through a shared equity scheme, you’ll usually make a monthly payment towards your mortgage.

If you’re finding it difficult to pay your bills, you might be able to:

• ask your lender to temporarily pause or reduce your monthly mortgage payments

• sell back some of your stake in the property to the landlord or another part-owner.

Find out more about shared ownership and shared equity on mygov.scot.

If you have an endowment policy

If you have an endowment policy, you could either:

• reduce the payments on your endowment policy

• stop payments into your endowment policy - you'll have to make up these payments later

It can be complicated and financially risky to make changes to an endowment policy. If you're thinking about making changes, you should get advice from an independent financial adviser.