I've been put at risk of redundancy - what happens if I can't pay my mortgage?

I've been put at risk of redundancy and am starting to worry about money.

I have a wife and two young children. We live in a three-bedroom semi-detached house and I don't want to have to sell it. We're really settled where we are.

What happens if I can't pay my mortgage? Am I at risk of losing my home? Are there any options out there that could help me financially through tough times?

Jane Denton, of the Daily Mail, replies: You are far from alone in what you are facing.

Across different sectors, including retail, tech and hospitality, businesses have been reducing their workforce in a bid to cut costs.

It comes after Rachel Reeves introduced higher employer national insurance contributions and wages, leading some firms to struggle.

Data from the Office for National Statistics this week showed the unemployment rate was at 4.7 per cent between May and July, up on the previous quarter.

The estimated number of vacancies fell by 10,000 on the quarter, to 728,000, in June to August. This marked the 38th consecutive period where vacancy numbers fell compared with the previous three months, the ONS said.

Mortgage repayments comprise a large portion of many people's monthly expenses and losing a job can put a significant strain on people's finances.

You have not told me what, if any, redundancy payment you may be entitled to should you be made redundant after the consultation period. If you receive a redundancy payout, it may help temporarily cushion the financial impact of losing your job.

Check if you have any income or mortgage protection policy in place which could assist while you get back on your feet financially. Many people are offered these when they buy a new home, but they aren't compulsory.

Be open and honest with your lender at the earliest opportunity. Phone them up, explain the situation you are in and ask what help they can offer you if you struggle to meet your mortgage repayments.

If you get to the stage where you cannot keep up with your repayments, your lender may offer you a mortgage payment holiday. This can be a good temporary option, but be aware that you will still accrue interest on the loan during the period.

A mortgage payment freeze or deferral could also end up affecting your eligibility for future loans.

Repossessions are undertaken as a last resort and your lender will work with you to avoid this becoming a possibility.

Gerard Boon, managing director of Boon Brokers in Bungay, Suffolk, says: With redundancy rates on the rise, it is understandable that many families are beginning to worry about how a sudden loss of income in the form of a redundancy could affect their ongoing mortgage.

The thought of falling behind on payments is of course very stressful, and the worst fear for most people is losing their home.

But it’s important to be clear: repossession is not automatic, and lenders are required to work with borrowers to help explore solutions, long before repossession is even considered.

As a general rule of thumb, the first and most important step is communication.

If you are struggling, or expect that you might be soon, let your lender know straight away.

While mortgage arrears will be taken seriously, lenders have an obligation to work with you.

In practice, this means they will try to find arrangements that will allow you to keep up with payments in some way, even if they are reduced or restructured for the short-term.

In the case that you find yourself simply unable to make your mortgage payment, the process usually begins with a call or letter from your lender.

This is not intended as a threat but as an opportunity to talk through your circumstances.

The earlier you start the conversation, the more options are usually available.

In my experience, lenders are often keen and prepared to work with borrowers, whether that means switching to interest-only payments to reduce the monthly outgoings, extending the mortgage term to make instalments more manageable, or agreeing a short payment holiday to give you breathing space.

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This all will naturally depend on your specific circumstances and, when difficulties last longer, many lenders will set up what is known as an arrears management plan.

This is essentially a structured agreement that takes your income and expenditure into account and sets out a repayment schedule that both sides can stick to.

The key point, however, is that repossession is very much a last resort.

It happens only after months of missed payments and repeated failed attempts to reach an alternative solution.

There are also other avenues of support available. The Government runs the Support for Mortgage Interest scheme, which can help to cover interest payments if you are receiving certain benefits.

It does not clear the mortgage, but it can help ease the immediate financial strain.

It is also worth checking whether you hold mortgage payment protection insurance or a broader accident, sickness and unemployment insurance policy.

These policies are designed to step in at times of redundancy or illness, though in truth, it is sadly common for homeowners to realise too late that they do not have the right cover in place.

Beyond the mortgage itself, households can often stabilise their finances by reassessing other commitments, such as unsecured debts, utility bills, or childcare costs, and seeing whether any short-term support is available.

Small adjustments, when combined, can make a noticeable difference to day-to-day cash flow while you look for new employment.

The main message for anyone worried about redundancy is that while you may not have control over being made redundant in today’s employment and cost-of-living crisis, repossession is not inevitable.

By talking to your lender early, exploring government and insurance support, and taking a pragmatic and realistic look at household finances, it is possible to weather a period of uncertainty and keep your family secure in the home you all love.

Jonathan Chesterman, debt advice policy manager at StepChange, says: If you are facing redundancy, the first step is to contact your mortgage lender as soon as possible to let them know.

While this may feel daunting, it is important to remember that mortgage providers deal with these kinds of issues every day.

Not only do they want to support customers who may be struggling, but they also have a regulatory responsibility to do so.

Your lender will discuss options that may be available in your situation, such as moving to an interest-only loan, taking a mortgage payment holiday, or extending the term of your mortgage. These options can alleviate some financial pressure while your income is reduced.

If you are out of work, it is also worth looking into any additional sources of support you may be entitled to that can help while finances are tight.

For example, you may be eligible for the council tax reduction scheme. Contact your council to see if they offer this and whether you can apply.

There may also be other benefits you can claim depending on your circumstances. StepChange has a free benefits calculator that can help you identify what support you could be eligible for.

In the event that you receive a redundancy payment, consider using it for essential household bills rather than to pay off your mortgage.

Since it is uncertain how long you might be out of work, focus on keeping up with your monthly mortgage payments until your situation improves.

While your income is reduced, it is always a good idea to seek help rather than relying on credit if possible, as borrowing may only worsen financial problems in the long-term.

If you are worried about debt repayments, there a number of charities and organisations willing to help and advise you.

You are not alone in feeling anxious about debt. In fact, life events such as redundancy are among the leading causes of problem debt in Britain.

Taking early action, exploring available support, and seeking free, expert advice can make a significant difference in how you manage your finances during this challenging time.