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Site updated:

12 February 2012

Cutting down your monthly mortgage costs

This information applies to Scotland only

On this page, we tell you about some of the things you could do to stop yourself from falling behind with your mortgage payments and getting into debt. You will have to negotiate with your lender to make any of these changes to your mortgage and it will be easier to do this if you have planned your budget. If you haven’t already done this go to the Budget Sheet fact sheet or use some of the self help debt packs on www.nationaldebtline.co.uk/scotland/.

There is a UK government scheme for people who are facing a temporary reduction of income called the Homeowners Mortgage Support. It allows you to defer paying interest on your mortgage for a period of time. It has strict rules about who is eligible for the scheme, see Schemes to provide support to homeowners in danger of losing their homes.

Changes you could make include:

Before you agree to make any changes to your mortgage, you should ask your lender if there will be a charge for this, such as a redemption or administration charge, and how much this will be. You should take account of this in your budget.

Switch to a cheaper mortgage or insurance deal

You might be able to switch to a cheaper mortgage with the same lender. Many lenders have a range of mortgages on offer and you might be able to change yours to one with lower monthly costs because, for example, the interest is at a fixed rate for a fixed period. You should seek independent financial advice before you change your mortgage with your current lender.

You might find a cheaper mortgage deal with another lender. You may have to pay charges for changing your mortgage lender and you will still have to pay off any arrears. The Money Advice Service website has information about all the different types of mortgage you can get and switching your mortgage at www.moneyadviceservice.org.uk.

You might be able to cut down on other costs by switching to cheaper mortgage protection insurance, buildings or contents insurance if these have been organised at the same time as your mortgage. You can get information about switching your insurance provider on the Money Advice Service website at www.moneyadviceservice.org.uk.

Cutting down your monthly payments to the lender

You might be able to:

reduce your monthly interest payments. Your lender will probably only agree to this if there is equity in your property. This means that the property must be worth more than the amount that is owed on the mortgage
change to interest-only payments. This will reduce your monthly costs if you were paying off the capital as well as interest each month
reduce or stop repayment of the capital you borrowed temporarily. You can ask for a payment holiday on the capital but you may only be allowed this if you have short term financial difficulties
increase the period of time over which the mortgage is paid. This would be more than just a temporary option and would mean you paid more interest in the long term.

Changing payments on your endowment policy

You might be able to:

reduce the payments on your endowment policy, if you have an endowment mortgage but see the warning below
stop making payments into your endowment policy. You will have to make up these payments at a later date.

Making any changes to an endowment policy can be complicated and financially risky. You should seek independent financial advice first if you are thinking of doing this.

Cutting down payments on shared ownership and shared equity properties

If you own your property through a special scheme that helped you to buy your property you will either have:

shared ownership and you pay rent and a mortgage – you will share ownership usually with a registered social landlord
shared equity and you pay a mortgage - you will share ownership with the Scottish Government - under several schemes called LIFT, the New Supply Shared Equity scheme or the Open Market Shared Equity Scheme.

If you’re having financial problems you may be able to reduce your mortgage payments by selling back some of your stake in the property to the landlord or other part owner. You should contact the lender as soon as possible.

See Dealing with your mortgage lender.

If you have trouble in meeting your mortgage or rent payments or you are already in debt, you should get help straight away from an experienced debt adviser. A Citizens Advice Bureau should be able to help. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.