What if I get into financial difficulties and have problems paying my mortgage

It can be very tempting to borrow the maximum your mortgage lender will allow you. The monthly repayments won’t be cheap but, with interest rates at a historically modest level, they shouldn’t present too much of a burden.



Expect the unexpected

But interest rates can change and so can your circumstances, turning a monthly payment that used to be perfectly affordable into a problem that keeps you awake at night.

In may be 10 years since most people were paying double-digit annual interest on their mortgage, and hopefully we won’t see rates that high for a long time to come

But no-one knows for certain what direction the economy will take in the future.

So it’s essential to plan for the worst.

Taking a fixed-rate mortgage may protect you for a few years, but when your deal ends, you could face a very nasty shock.

Even if interest rates don’t rise significantly, what if your own situation deteriorates?

Other debts or a relationship break up could have a serious effect on your financial health.

And if you can’t keep up your mortgage repayments, your mortgage lender is perfectly entitled to repossess your home.

Don’t over-extend yourself

That’s why it’s essential to leave a little slack in your finances.

It’s also wise to have a savings cushion of at least three months’ income to fall back on – and to take out insurance to cover your mortgage.


If the worst happens

If you do get into financial difficulties, don’t bury your head in the sand.

The sooner you let your lender know, the higher the chance that it will be willing to negotiate.

For example, it might agree to a payment holiday, or to switch you debt temporarily from a repayment to an Interest-only basis, giving you a much needed breathing space

To find out about state help, read What if I lose my job or get sick? and Can I get state help with my mortgage?