By August, a million homeowners had obtained permission to defer their mortgage payments. Due to Covid-19 restrictions, mortgage lenders could not start or continue court action for repossession until at least 31 October. If you/re in arrears you should take action now to avoid repossession.

Making extra mortgage payments

You may be able to pay back what you owe by paying extra on top of your mortgage payments. To see if you’ve got money to spare, you will need to work out a budget. If you visit our website citizensadvice.org.uk and search for “Budget” you can find our budgeting tool and lots of advice.

Adding what you owe to your capital

You might be able to clear your arrears by adding the money you owe to your capital (the amount you borrowed) and paying it back over the remaining period of the mortgage. You could also ask to extend the term of the mortgage in order to reduce your monthly payments, although you will end up paying a larger amount in total.

Interest-only mortgages

If you’re on benefits, you may be able to switch to interest-only and get a government loan (“Support for Mortgage Interest”) to help pay the interest. If you already have an endowment mortgage, you could think about giving up or selling your policy. However, you should think very carefully before doing this. You will need to find another way to pay off your mortgage loan and alternative life insurance. Get independent financial advice first.

Personal pensions for those over 55

You could take some of your pension money to help with your arrears if you’re over 55 and have a defined contribution pension. Before you do you should consider whether you’ll need this money later in life. You may have to pay tax on some of the money you take, and if you’re receiving benefits, they may be reduced or stopped. You should speak to a financial adviser.

Mortgage Payment Protection Insurance

If you’ve lost your job or had a temporary loss of income, check whether you have mortgage payment protection insurance (MPPI). The MPPI policy may cover your mortgage payments if you can’t work because of unemployment or sickness.

Selling your home

If you can’t find any other way of clearing your arrears, you could think about selling your property. If you’re evicted or just hand back the keys to your mortgage lender instead, your house will probably be sold at auction and this may not cover your debts. Private sale and rent back schemes can be very risky – you should only think about these if you have no other options.