What to do if you can’t pay your mortgage or loan, as number of people struggling rises 40%

The number of people struggling to make loan repayments has risen by 40 per cent, and now the financial watchdog is urging them to seek help from their lender.

There are now 10.9million people having difficulty with mortgage and loan repayments, up from 7.8million a year ago, the Financial Conduct Authority said. 

The proportion of missed payments rose by 33 per cent in the period, from 4.2million to 5.6million.

Britons are struggling more with loan repayments due to the rising cost of living, which is the cause of a second source of financial pain: increases to the Bank of England base rate.

Speak up: Consumers who have run into payment trouble are asked to speak to their lender

The UK central bank has been making steady hikes to base rate, now at 4.5 per cent, to try to bring down soaring inflation.

But as base rate rose, so too did mortgage and loan repayment costs.

Car repayment costs hit a record high in 2022 and house repossessions more than doubled in the final quarter of last year. 

What to do if you are struggling with loan repayments 

Those struggling with repayments should speak to their lender or the firm they owe money to in the first instance, the FCA has said. 

What help can my lender give me?

Financial firms have been told by the regulator to give support to customers struggling with payments.

What that support looks like is down to individual firms, as the FCA has only given a broad order that it expects companies to meet.

This is because being too prescriptive might mean some Britons do not get the help they need, so the FCA wants to give firms a sense of what it wants and to let them fill in the gaps. 

But the regulator has said it expects firms to give ‘an appropriate level of care and support’ to customers, and to give more care if that person is vulnerable.

The FCA suggested lenders could extend customers’ repayment terms or come up with a new repayment plan if they run in trouble, or even reduce or freeze their payments.

The regulator has also told financial firms that any fees they charge for delayed or underpaid payments should be fair, warning them against profiteering.

FCA executive director of consumers and competition Sheldon Mills said: ‘If you’re concerned about your finances, you do not need to worry alone. We’ve told lenders that they should provide support tailored to your needs. And, if you find yourself in debt or want to know more about how to manage your finances, free expert advice is available.  

‘We will continue to act quickly to make sure financial firms help their customers who are facing financial difficulty or are worried they might be soon.’

What to do if you are struggling with debt 

Many experts advise that those having repayment difficulties first work out their monthly income and outgoings.

The next step is to work out where any savings can be made, or if there is any way of the individual bringing in more cash.

After that point the remaining steps are to prioritise repaying debt with the highest interest payments and then to seek help. 

These organisations and websites may be able to help if you are experiencing problem debt: 

This post first appeared on Dailymail.co.uk