Will My House be Repossessed If I Miss One Payment?

Perhaps the biggest fear for any homeowner is the potential of losing their home. After years of saving and hard work, to see something so cherished taken away would be heartbreaking.

Losing your home is perhaps not as cut and dry as you may think. In this current climate where the cost of living is seeing even the simplest things become unaffordable, mortgage lenders are trying to be supportive to help people get by. As a result, if you miss one payment, it is extremely unlikely your house will be repossessed.

That being said, it can happen, but in most cases, mortgage lenders will have a grace period allowing you to catch up on your payments and get your finances back in order.

What happens if I miss one mortgage payment?

If your finances are a little overstretched and you are not going to meet your mortgage payment, you should call your lender before the payment is due. This transparency and honesty shows you are being proactive and aware of the situation. This may see the lender working with you to organise an easier way to pay back the missing payment.

Many lenders are now in fact signed up to the mortgage charter meaning that people cannot be forced from their homes within a year of missing one mortgage payment unless there are exceptional circumstances.

If, however, you do not speak to your lender, they will contact you. This will normally be via a letter, explaining that one payment has been missed and either requesting the payment or offering support to help you clear the outstanding debt.

You’ll be given a timeframe to make the payment. In some cases, not paying is simply an error on your part and can be rectified by settling the debt, the lender will give you a period in which to complete this. Should your non-payment stem from it being unaffordable, the lender will look to discuss payment options with you where the outstanding amount will be factored into future payments or bolted onto the end of your existing deal.

How many missed mortgage payments until my house is repossessed?

This can vary per lender. In fact, most lenders don’t want to head down the repossession route, it can be costly and time-consuming. As a result, missing one or two payments may see them offer an olive branch and try to help you through the difficulties you are facing. Once you miss three consecutive months of mortgage payments though, they might start to get a little more concerned.

In many cases, it is at this stage a lender will start to begin the repossession process. This can be sluggish and take its time, but should no resolution be found, the repossession timeline will be worked through until you are forced from the property.

What should I do if I miss one mortgage payment?

Quite simply, inform the lender before they reach out to you. This way you can work together to find a solution. If you keep hiding from the problem and it only gets bigger, it won’t be long until they start to press you for payment or take action.

What are the options if I miss one payment?

If you miss one mortgage payment, it could stem from a host of reasons. Some of which could be easily fixed. If for example, you have recently changed jobs and your pay date has changed, your lender might help by adjusting your mortgage contract to align with that.

In some cases, one missed payment could be the start of a chain of them, especially if your financial situation has taken a considerable turn for the worse. If this could be the case, or you are concerned that one missed payment may have an adverse effect on your home ownership, there are things you can do.

Contact your lender

If you realise you will be unable to make the payment, or the payment date has passed without you meeting it, contact your lender right away.

Most lenders will look at manageable ways to help you through this any difficulties. Explain to them your situation and provide your ideal solution. If, for example, this is only a short-term issue and you have already planned how to fix it, they will be much more accommodating than if you just leave the problem to get worse.

If it is likely to be a long-term problem, you should speak to them about a payment plan or payment holiday. It may even be worth asking about an interest-only mortgage to be in place temporarily. This way, you only pay the interest back each month rather than the capital. This will see the monthly outgoings reduced but will see your overall debt increase.

Speak to a debt specialist

If you feel that one missed mortgage payment could escalate into many more, speak to a debt specialist as well as speaking to your lender. A debt advisor will help you craft a financial plan that could satisfy the needs of the lender and keep your head above water. They will help you work out your debt priority so the bigger issues can be tackled first with other, less important debts given less attention for now.

Offer to make a payment

If you know that you will definitely not make the full payment but can make a partial payment, a lender will certainly be more open to helping you than if you don’t pay a penny.

See if you have mortgage insurance

If you took out a mortgage insurance plan when you bought the house, you could find that your missed mortgage payments are covered by it. Mortgage protection insurance gives you cover in the event of job loss or ill health, but policies vary so it is best to check before hedging your bets.

Apply for benefits

If your financial situation looks like it could be long-term, applying for benefits may help. You could then find mortgage payments more affordable and avoid having to face court action or repossession. Benefits are not guaranteed to cover the full mortgage payment, and you should not rely on them to cover all of what you owe.

Use your pension

If you have a pension, you might be able to access it to free up some cash and put it towards any mortgage arrears. This can be risky as not only will you lose out on future growth from the pension funds but there may also be charges for withdrawing it early. If considering this option, you should speak to a financial advisor first.

Will missing one mortgage payment affect my credit score?

Yes. Even if you pay the debt relatively quickly, the fact you’ve missed a payment on a financial obligation will be shown on your credit file. Obviously, the more you miss, the worse your credit score becomes, but you should be aware that even one payment can have a negative effect. This could then mean future mortgage applications or borrowing could result in rejection.

Can I sell my house if I am in mortgage arrears?

It could be an option but before you rush into such a drastic decision, you should speak to your lender. Where we talk about missing just one payment, it is quite possible for you and your lender to reach an agreement as to how the outstanding amount is paid back. Should the missing payments start to become more frequent though, selling could become an option.

That way you avoid repossession, satisfy the lender by clearing the debt and potentially make yourself a profit. As we all know though, the wheels of property sales turn slowly on the traditional market. The current average time to sell a home is around three months, and this could be enough of a timeframe to see a lender look to press ahead with repossession.

An option worth considering is to speak to a cash house buyer. With no need for them to gain a mortgage or rely on property chains, they can buy your house fast and have you moving out, with cash in the bank in just seven days.

If this is an option you are open to, speak to Bettermove, we sell your house fast, and to assist you in this financially delicate time, we do it for free too. No legal fees, no hidden charges and no surprise costs. A totally free house sale in a timeframe that suits you. Contact our team today to get your quick house sale.