5 Things To Do If You’re Struggling To Pay Your Mortgage

In the UK, foreclosures were high in the past decades. Although they dropped in the past few years, the housing saga continues to unfold as economic stagnation and high unemployment rates due to the current pandemic leave homeowners broke—and sometimes unable to make their mortgage payments.

If you’re one of those homeowners struggling to make your mortgage payments, don’t lose hope just yet. Here are several options you can do:

1. Sell Your Home

Sometimes, the best way to stop house repossession is to get rid of it altogether. And the best way to do this is to list your home traditionally. However, the falling real estate values remove the option of listing your home the usual way, especially for people whose mortgages are bigger than their property’s market value.

If this sounds like you, then you still have two options:

  • Short Sale

In this case, the bank agrees to let the homeowner sell the home for less than what they owe on the mortgage. However, lenders aren’t that thrilled about the idea of taking less than what they’re owed. So, it’s up to the lender to decide whether they’ll allow a short sale. 

This option won’t be as damaging to your credit as a foreclosure, provided that the creditor doesn’t report the debt reduction to the credit reporting agencies. 

  • Deed In Lieu Of Foreclosure

In some cases, lenders will allow struggling homeowners to sign their deed over to the bank rather than suffer a foreclosure. The borrower gives the home over to the lender who can sell it to recover what they’re owed.

Take note that both options have tax implications. Thus, homeowners need to consult with a tax professional and a housing counselor in order to determine the full implications of this move.

2. Refinancing

This is a good option for homeowners who haven’t stretched their finances to the max. You can do refinancing in two ways:

  • Refinance To A Longer-Term Loan

Spacing your mortgage loan out over a longer period can help reduce your monthly payment amount. This is the simplest way to reduce your monthly mortgage payments, particularly when cash flow is a short-term problem.

  • Refinance To Change Interest Rate Terms

This is a viable option if you’ve almost finished paying off your mortgage. Doing so can help solve short-term cash flow issues by reducing your monthly payment at the expense of your subsequent payments.

However, keep in mind that refinancing often includes some pretty expensive fees for breaking the existing mortgage contract. Plus, it can also cost you more in interest over time. For homeowners who already overextended their loan, refinancing might not be an option at all. 

3. Loan Modification

This is an alternative solution if you can’t refinance your mortgage but needs to lower their monthly payment. It refers to the process of working with a lender to change the terms of the mortgage loan. This can be a permanent or temporary change to the mortgage term, rate, or monthly payment.

Unfortunately, it can take several months for borrowers to be approved for a loan modification application. Plus, the process involves a lot of paperwork that should be completed and sent to the lender for review.

4. Consider A Home Equity Loan

A home equity loan can provide immediate assistance to struggling homeowners. However, it can only work if you have a lot of equity in your home, meaning that your house is valued higher than what you owe on it. It’s recommendA home equity loan can provide immediate assistance to struggling homeowners. However, it can only work if you have a lot of equity in your home, meaning that your house is valued higher than what you owe on it. It’s recommended that you consider paying off your mortgage with a home equity line or reverse mortgage.

Banks typically cover all closing costs on a home equity line. These savings from the closing costs can be used to pay off your principal balance quicker. Also, this is an effective strategy for homeowners who have the discipline to pay more than what’s owed each month since the minimum payment is typically just the interest that has accrued every month. 

5. Eliminate Private Mortgage Insurance

Depending on your home’s equity, eliminating the private mortgage insurance should lower your mortgage payments. If you have about 20% equity in your home, then you can ask the lender to drop the mortgage insurance.

Borrowers who don’t pay a 20% down are required to have private mortgage insurance (PMI) for at least two years. However, there are certain exceptions. For instance, if the homeowner made home improvements that increased its value, this requirement might be waived. So, make sure to ask your lender about this.


If you’re struggling with your home mortgage, don’t give up yet! The above solutions should be able to help you manage your monthly mortgage payments and keep a roof over your head.