Redundancy fears push mortgage concerns to the fore as lenders outline protections

A Daily Mail reader facing redundancy asks what happens if he cannot pay his mortgage, a scenario that is increasingly common as firms trim jobs across sectors such as retail, technology and hospitality. The guidance comes as official data show the unemployment rate rose to 4.7 per cent between May and July, while vacancies fell by 10,000 in the quarter to 728,000 for June to August, marking the 38th consecutive quarterly decline.

Experts emphasize that repossession is a last resort and that borrowers should talk to lenders as soon as difficulties emerge. Gerard Boon, managing director of Boon Brokers in Bungay, Suffolk, says the first step is to contact the lender early. Lenders are generally prepared to work with borrowers to find arrangements that may include switching to interest only, extending the mortgage term, or agreeing a short payment holiday to ease monthly outgoings. In many cases an arrears management plan is set up to tailor repayments to income and expenditure.

Beyond immediate loan adjustments, there are state and private supports to consider. The Government runs the Support for Mortgage Interest scheme, which can help cover interest payments for eligible claimants, though it does not clear the mortgage. Borrowers should check whether they hold mortgage payment protection insurance or a broader accident, sickness and unemployment policy that could kick in during redundancy, though many homeowners discover too late that they lack the right cover. StepChange policy advisers note that a redundancy is a common driver of debt problems, and early action can help. They also point to council tax reduction schemes offered by many councils and to free benefits calculators that help households identify what they may be entitled to.

Households can also stabilise finances by reassessing other commitments such as unsecured debts, utility bills or childcare costs. Small, targeted adjustments can improve day to day cash flow while looking for new work. The Daily Mail guidance also notes that if you receive a redundancy payment, it may be prudent to use it to cover essential bills rather than to clear the mortgage while you are out of work, since income recovery is uncertain.

Remortgaging and purchasing decisions add another layer of planning. Borrowers with fixed rate deals ending or those buying a home should explore options promptly. Remortgage reference sites and brokers can help compare rates, and homeowners can often lock in a new deal six to nine months ahead, sometimes with no obligation to take it. Some deals allow fees to be added to the loan and charged only when the loan closes, which means interest accrues on the added amount over the life of the loan. This can be sensible for some, but not all, borrowers. Buy to let investors face different costs as rates rise; remortgaging may come sooner for investment properties. This is Money and its partner brokers outline the value of speaking with a broker to compare costs. The overarching message is clear: talk to lenders early, explore government and insurance support, and carefully review household finances so a period of uncertainty does not threaten the home you love.