Help for homeowners after redundancy

What to do if you are worried about getting into mortgage arrears after being made redundant.

Contact your lender

Contact your lender as soon as you start to fall behind with your mortgage payments or if this might happen soon.

You can negotiate with your lender about ways to reduce your monthly payments.

Your lender may allow you to:

  • take a payment holiday – this is where you pay less or nothing at all for a short period and catch up later
  • consolidate the arrears – add the arrears to your mortgage. This will increase the debt and probably the monthly payments
  • extend the term of your mortgage – repaying the mortgage over a longer period should reduce the monthly payments
  • switch to an interest only-mortgage – this should also reduce your monthly payments but will not repay the capital, which is the amount you borrowed

Make sure that you can keep to any agreement you come to with your lender. They are less likely to agree to further changes if you get into arrears again.

Find out more about dealing with mortgage arrears.

Apply for government mortgage support

You may be eligible for government help called support for mortgage interest to keep your home if you lose your job.

If you claim certain welfare benefits, you may be entitled to help towards the interest payments on your mortgage for up to two years.

You will only be entitled to claim for the interest on your mortgage. The amount paid may not cover the full cost.

You won't receive any help with any capital you have to repay.

Find out more about support for mortgage interest.

Claim benefits to help keep a home

You may be eligible for benefits to help you keep your home.

If you are made redundant, you may be able to claim benefits such as jobseeker's allowance or income support.

Find out more from about benefits you may be eligible for.

You need to claim these benefits to be able to claim support for mortgage interest to help you to keep your home.

You may not be eligible for benefits immediately if you have received a redundancy payment or payment in lieu of notice.

If you have mortgage payment protection insurance it is probably a condition of your policy that you are receiving benefits to claim the insurance.

You won't be able to claim housing benefit if you are a homeowner.

If you part-own your home through a shared ownership scheme, you can claim housing benefit on any rent you pay.

Check insurance policies

After redundancy, you may be entitled to financial support if you have mortgage payment protection insurance. This is usually be for a limited time only. Check your policy details.

Payments from this policy could give you extra time to:

Find out more from Which about mortgage payment protection insurance.

Take in a lodger

You could rent out a room in your home, if you have space and your circumstances allow it.

You can earn a certain amount from rent without paying tax on it. The money raised may help you with your mortgage costs.

Check with your lender and ask permission to rent out a room. If you don't you could be breaking the terms of your mortgage agreement.

Find out more about taking in a lodger.

Sell your home as a last resort

You could decide to sell your home voluntarily if you cannot afford to keep up with your mortgage payments and things are unlikely to improve in the future.

If you are in negative equity, you still owe money to your mortgage lender after you sell.

Find out more from the Money Advice Service about negative equity.

Get independent advice before selling your home, especially if you think you may be homeless afterwards. Your local council won't help you with housing if it decides you made yourself intentionally homeless.

Use Shelter's directory to find a housing adviser

Last updated 01 Jan 2015 | © Shelter

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