Keeping up with your mortgage

If you are worried about making your mortgage payments, talk to your lender as soon as possible. They can help you find a solution. If you miss several payments and haven’t spoken to them, they could take serious action including taking you to court.

Prepare some information about your personal situation and finances before speaking to your lender.

Your lender must follow a set of rules to help you keep your home. They may suggest:

  • reducing your mortgage payments or changing them to interest-only for a time
  • a payment holiday (break from payments)
  • extending the term of your mortgage
  • changing the interest you pay
  • claiming money from a health or life insurance policy to help cover your housing costs
  • taking ill-health retirement and claiming your pension early if you’re terminally ill or unable to return to work.

You might consider changing your mortgage to clear your debts in the short term. But this can be risky and you should talk to your lender or mortgage adviser before making changes.

It can help to plan what should happen to your home if there’s a chance your illness could get worse.

If you’re worried about your mortgage

If you are worried about cancer affecting your mortgage payments, taking action as early as possible is important.

If you have concerns:

  • do not ignore the problem
  • talk to your lender as soon as you can
  • check what help you can get, from any benefits and from your lender
  • get free, independent advice from our financial guides on 0808 808 00 00.

Finding a solution

The best solution for you will depend on:

  • the type of mortgage you have
  • your age
  • your personal circumstances
  • whether you can claim any extra financial support
  • the amount of equity in your property.

If you are on a low income and qualify for certain benefits, you may be able to get help with your mortgage interest. It’s important to get expert guidance about your own situation. Contact us or another organisation such as Citizens Advice for more help.


Talking to your lender

If you have a mortgage, you do not have to tell your mortgage lender about your cancer diagnosis. But it’s usually better if you do. If you think you will have problems paying your mortgage, tell your lender as soon as possible. You and your lender can work together to find a solution. The sooner you deal with the situation, the more options you will have.

Missed payments

If you miss one or more payments, this is called being in arrears. If you miss or stop payments, many lenders will charge a penalty. Even one missed payment can negatively affect your credit rating.

Most lenders have teams dedicated to helping people worried about missed payments. You should speak to them as soon as you can if you need help.

You can also get guidance by speaking to our financial guides. Call our support line on 0808 808 00 00 for more information.

If you miss several mortgage payments and don’t talk to your lender about it, they could take serious action against you. This could include taking you to court. Eventually, you could lose your home. This is known as repossession, but this would only be a last option for your lender.

If you’re facing serious action like this, always seek expert advice from your local council. Or you can contact charities such as Shelter, Citizens Advice or StepChange Debt Charity.

Options your lender may suggest

Depending on your situation, your lender might suggest ways to help you manage your payments. These may include the following:

  • Reducing your mortgage payments for a set period of time.
  • Changing your repayment to interest-only payments for a set period of time. Remember, you won’t be paying off the loan if you do this. You will only be paying the interest. Your payments will also be higher when you start paying again.
  • Allowing you to take a break from paying your mortgage. Some mortgage contracts include the ability to take a payment holiday (see below).
  • Extending the term of your mortgage, so you pay less each month. But it will take you longer to pay off the full mortgage.
  • Changing the interest rate you pay.
  • Adjusting your monthly payments to cover any payments you have missed. This might mean you pay more each month, so that you can still pay the total amount owed within the original term.

Payment holiday

This term is often included in your mortgage contract, especially if you have a ‘flexible mortgage’. It involves taking a temporary break from making your regular mortgage payments.

If a payment holiday is included in your mortgage deal, you won’t have to make any payments during the agreed period. The payment holiday won’t affect your credit rating. When you take a payment holiday, usually the payments you miss are added to the total balance of your mortgage. This means your monthly payments may go up slightly when you start repaying again.

If you ask your lender for a payment holiday and it isn’t included in your mortgage deal, they may say no. But you should ask whether they’ll let you make nil payments for a short period. This means you won’t be making any payments towards your mortgage. If you can prove you can start making full payments again after the break, this will help your lender decide whether they can help. You should also ask whether making nil payments would affect your credit rating.

We can help prepare someone for speaking to any lenders that they have – whether that be mortgage related, loans or credit cards.

David, Macmillan financial guide

Macmillan helped us negotiate with the council, who agreed to call off the bailiff and accept a reduced monthly payment.

Charles

I didn’t have any insurance to pay my mortgage. Macmillan told me I could negotiate with my mortgage lender a two-month mortgage holiday.

Alan


Tips on talking to your lender

Your lender can talk to you about your personal situation and the options available. If you prepare some information before calling, the conversation will be easier.

Preparing for your conversation

Before you speak to your mortgage lender, try to do the following:

  • Check whether you have an income-protection insurance or mortgage payment-protection insurance policy (see below).
  • Check whether you can claim any benefits that may increase your income.
  • Have details of your income and your outgoings. It is important to make sure these details are correct and realistic. Check your bank statements and look at what you spend on things like food shopping and gas and electricity bills.
  • Think about how much you can afford to pay. Make sure this amount is realistic. Leave yourself enough money for food, heating and other essentials.
  • Have details of your diagnosis and the expected outcome of your cancer (your prognosis).

During the conversation

When you speak to your lender, it may be helpful to talk about these following points:

  • Find out whether your lender has a specialist team for helping vulnerable people.
  • Tell your lender about your cancer diagnosis. For example, the type of cancer you have and what treatment you are having (or are going to have). Tell them about how the cancer and its treatment are affecting your everyday life. You do not have to tell them anything you are not comfortable sharing.
  • If you can, tell your lender how the cancer has affected your income and your ability to manage money.
  • You could also tell them how your situation affects your ability to deal with them. For example, you might not be able to talk on the phone for very long, or at certain times. Or your medication may affect your memory. You could tell them if someone is helping you deal with your money issues. If they know about these things, they’ll be able to work with you in a way that better suits you.
  • Tell your lender when you expect your finances to return to normal, if you have an idea of when this might be.
  • Let them know about any claims you have on insurance or pension policies, or if you are planning to make any claims.
  • If your lender suggests ways to help you, ask how this will affect your mortgage payments when that help stops. You could also ask what you can do to stop your credit rating being negatively affected.


What your lender must do

Your lender must follow a set of rules to help you keep your home. These are called a pre-action protocol in England, Wales and Northern Ireland. They are called pre-action requirements in Scotland.

Your lender will need to:

  • tell you the exact amount you owe and any interest charges you’ll have to pay
  • listen to any request from you to change how you pay your mortgage
  • respond to any offer of payment you make.

If you continue to struggle with paying your mortgage, your lender has to:

  • explain why within 10 working days, if they refuse your offer of payment
  • give you at least 15 working days’ written warning if they plan to start court action, which would be because you haven’t kept to a repayment agreement, but starting court action would only be a last option.


What you must do

When dealing with your mortgage payments, you must:

  • be willing to give your mortgage lender written evidence of your health issues
  • show you are willing to make repayments of an amount that you can afford
  • pay what you can, when you can – even if you can’t afford your full monthly mortgage payments at the moment
  • get a written copy of any repayment arrangements you make with your lender
  • keep in regular contact with your lender and tell them if your situation changes.


Changing your mortgage

If you have lots of other debts as well as your mortgage, you may be tempted to add these debts to your mortgage by:

  • remortgaging (taking out another mortgage) with a new lender
  • taking out a ‘further advance’ with your current lender, which is when you borrow more from them, usually at a different rate to your main mortgage.

You may also be tempted to:

  • take out a secured loan on your property
  • take out a consolidation loan (see below).

Remortgaging or a further advance may let you clear your debts in the short term, but it can also be risky. Even if the interest rate is lower, it may still be difficult to afford payments. The low interest rate may only last for a few years, and your payments may increase at the end of that period. It can also affect whether you qualify for help towards the payment of the interest through any benefits.

You may also have to pay fees to increase your mortgage or move to another lender. Lenders must check that you can afford your mortgage repayments. You may be refused a new mortgage even if you think you could manage the repayments.

You should speak to your current lender and ask how they can help you first, before trying to get a new mortgage. If you still think you want to change your mortgage, you should speak to an independent mortgage broker before making any decisions.

A family member or friend may be able to recommend a broker, or you can find one in your area by visiting one of these sites:

If you are thinking about changing your mortgage because you are struggling to repay debts, you should get free, independent advice first. You can get this from an organisation such as Shelter or StepChange Debt Charity.

Debt-consolidation loans

These loans put all your different debts together into one loan. The idea is to try to lower your monthly payments. You borrow enough money to pay off all your current debts and then you owe money to just one lender.

This type of loan was common in the years leading up to the financial crisis of 2007–2008. They are now less common.

You should be careful with this type of loan. They can often be dangerous and lead to even more debt. These loans are often secured against your home. This means if you cannot keep up with the loan repayments, your home will be at risk.

You need to be sure this type of loan will cut your spending and help you get back on track. Otherwise you could end up being in even more debt. You can get support by speaking to one of our financial guides. Call our support line on 0808 808 00 00 for more information. Our guides can refer you directly to the vulnerable customer team at StepChange Debt Charity.


Insurance

Checking your insurance

It’s important to check any health or life insurance policies you have. Your situation may mean you could get some money from your insurer. This is called a payout. A payout could help you with your mortgage or other housing costs.

Mortgage payment-protection insurance

This type of insurance may have been offered when you first arranged your mortgage. It pays your mortgage payments (and sometimes a bit extra) if you’re unable to work due to an accident, sickness or redundancy. The amount it pays out depends on how much insurance cover you originally paid for.

Some people may not be aware that they have this cover, so make sure you check with your mortgage provider. If you do have mortgage payment-protection insurance, you should make a claim as soon as possible.

The payout usually starts after a waiting period of one or two months, but it can be longer. This is known as the period of notice. With some policies, payments are backdated to the first day you stopped working. This is sometimes called ‘back-to-day-one cover’.

Mortgage payment-protection insurance can be useful in the short term. But it usually only pays your mortgage for up to about one year. It’s important to keep up the mortgage payments after that to avoid any risk of losing your home.

With some mortgage payment-protection insurance policies, you have to keep paying the premiums (the monthly payments for having the policy) even while you are claiming. Make sure you know whether your policy says you need to do this.

Income-protection insurance

This pays out a monthly income if you are unable to work because of illness or disability.

You might have income-protection insurance through your work. Check with your HR (human resources) department. If you do have it, your employer will deal with the claim. The payout is paid to you like ordinary pay, with tax and National Insurance taken off.

If you have taken out your own income-protection insurance, you will have chosen the level of income it pays out. You will also have chosen a waiting period. This is a delay between the start of the illness and the start of the insurance payout and may be from one month to two years. You do not have to pay tax on a payout from a policy you have arranged yourself.

The insurance usually carries on paying out until you either return to work or reach retirement age, whichever comes first. But some policies only pay out for a maximum term. This could be five years, or less for short-term policies. Some policies pay out less if you are able to return to work part-time. Remember to check whether you need to keep paying the premium while you claim.

If you claim benefits, they might be affected by an income-protection insurance payout. Or your payout may be affected by the fact that you get benefits. Speak to one of our financial guides on 0808 808 00 00 for more information.

Critical illness cover

This pays out an amount of money (a lump sum) that is tax-free if you are diagnosed with certain life-threatening health conditions.

You may have bought critical illness cover on its own, or it might be combined with life insurance. When it’s combined with life insurance, this is sometimes called life and critical illness cover.

Sometimes your employer will provide critical illness cover as a benefit. You should check with your HR department to see whether your company offers this.

Not every cancer diagnosis is considered life-threatening, so not everyone diagnosed with cancer will be able to get a payout under critical illness cover. Check the wording of your policy to see which cancers are covered. If the wording is not clear, contact your insurer.

Even if your cancer does not cause a payout on your critical illness cover by itself, you may still be able to claim. If you are left disabled and won’t be able to go back to work, you may be able to claim. This would be under the ‘total and permanent disability’ section of your insurance policy.

Depending on the policy, this might apply if you cannot do:

  • the same work as before
  • similar work
  • any work
  • a specified number of work-related tasks.

Life insurance

Life insurance is a type of insurance that pays out when you die. Sometimes it only pays out if you die during a certain period of time.

Life insurance is helpful for two main reasons:

  • It can pay off debts left behind, such as a mortgage.
  • It can provide money for your family.

Many life insurance policies include terminal illness cover. This means the insurer will pay out the full amount of the cover straight away if you are expected to live less than 12 months. You can keep the payout even if you live longer. You can use the money for any purpose. You should check with your insurer to see whether this benefit is included in your policy.

Employers may offer life insurance to employees. This cover is usually available to every employee (up to a set value), whatever their state of health. Speak to your HR department at work to find out more.

Your employer might offer a type of life insurance called death-in-service benefit. This benefit guarantees a lump-sum payout if you die while working for that employer. You can usually choose who you would want this payment to go to. These are known as your beneficiaries. However, sometimes death-in-service payouts go into a discretionary trust. This means you can’t choose exactly who will benefit.

If you are thinking about giving up work due to illness, it’s important to check with your employer what would happen to any life insurance cover they provide. If you have questions about your insurance policies, contact your insurer. You can also speak to our financial guides by calling 0808 808 00 00.


If your illness gets worse

Many people with cancer recover, and treatments are getting better all the time. But if there is a chance that your illness may get worse, it can help if you have planned ahead.

Ill-health retirement

If you are terminally ill, or unable to return to work, you may be able to take something known as ill-health retirement. This is where you can start claiming a private or work-related (occupational) pension early.

If you are not retiring, you might still be able to use your pension to help you pay your mortgage. Since April 2015, as long as you are aged 55 or over, you can now draw out your pension savings as one or more lump sums whenever you like. You can do this whether you are retiring, reducing your work hours or continuing to work as normal. It’s important to know that at least part of any lump sum will be taxed. Anything you draw out now will mean you have less income when you do retire. So think carefully before using your pension in this way.

Call our financial guides on 0808 808 00 00 to find out more about your options.

We have more detailed information in our booklet Pensions. You can order a free copy.

If you need long-term care

If you go into a care home or hospice, but your spouse or a dependant is still living in your home, they will be allowed to stay there.

Your spouse is the person you are married to, or in a civil partnership with. A dependant is someone who relies on you for support or income, for example a child or an adult with care needs.

Your local council (in England, Scotland or Wales) or Health and Social Care Trust (in Northern Ireland) may be able to pay for your stay in a care home, under certain conditions. But it is up to individual councils to decide what help they offer. Levels of support are different in England, Scotland, Wales and Northern Ireland.

If you don’t live with anyone, you can give legal permission in advance for a relative, partner or carer to rent out your property for you. With the correct permission, they may also be able to arrange for your home to be sold. The money can be used to cover your long-term care fees.

Your local council or trust may agree to lend you the money for the care home fees. This would be repaid once your home has been sold. This is called a deferred payment agreement.

Our booklet Your life and your choices: plan ahead explains more about planning what you want to happen if you become seriously ill. There are different versions for England and Wales, Scotland, and Northern Ireland. You can order a free copy from be.macmillan or by calling 0808 808 00 00.

If you die

If you die, your house (or your share of it) will be part of your estate. This is everything you own when you die, including money, property and possessions. However, if you have a mortgage or loans secured on the property, this will be taken from the estate. If you have a will, your estate will be given out to others in the way you stated.

If you don’t have a will, the law says how your estate should be given out. If you have no will, your house (or share of it) may be passed on to:

  • a married or civil partner
  • close relatives, such as parents, children, brothers or sisters.

A partner you live with but are not married to cannot inherit from you without a will. If you have not divorced your spouse, they will still inherit, unless your will says who you want your estate to be passed on to instead.

Who your estate is passed on to depends on your situation and where you live. To find out the exact rules about who will inherit what if you die without a will in your country, use the online tool at gov.uk.

If you own your home with someone else

If you own your home jointly, depending how you own it, your share may pass automatically to the other owner(s).

Joint tenancy or joint ownership is where everyone who owns the property has an equal share. When you die, the survivor(s) inherit your share.

Under this option, you cannot give your share of the property to another person through a will. But your share still counts as part of your estate, for example when working out inheritance tax. Joint tenancy is the most common arrangement for owning a residential property. In Scotland, having a joint tenancy is known as having a survivorship destination and people with a share are called joint owners.

Tenancy in common or commonly owned property is where each owner holds their own individual share of the property, and the shares don’t have to be equal. This means that when you die, your share becomes part of your estate and is distributed according to your will or the law.

Call us on 0808 808 00 00 for information about planning ahead and to find out how we can support you.

Back to Housing costs

Renting

If you are renting, you have certain rights and may be able to get help with payments.

Homelessness

You may be entitled to help if you are homeless. This could be advice or help with getting housing.