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Nothing changes on the mortgage itself. The lender is not told, the rate and the monthly payment stay the same, and the direct debit keeps going out on the same day. Redundancy is a problem for your income, not for the loan, so the practical question is how long you can keep paying and what to do if that looks tight.
The one thing that helps most is telling the lender early. Lenders are required by FCA rules to treat customers in financial difficulty fairly, and most have a range of options they may offer to someone whose income has stopped, from a short payment break to a temporary switch to interest only. None of them are automatic and none of them are promises, but all of them work better if you call before a payment is missed rather than after.
If payments are already tight, your lender is the first call. If you’re starting a new job, or your deal is ending and you want to know how lenders will see your situation, I can talk it through with you. The first chat is free and I reply the same working day.
Do I have to tell my mortgage lender I have been made redundant?
There is no obligation to tell them if you can keep paying. Most mortgage contracts ask you to tell the lender about a change that affects your ability to pay, and in practice the lender only finds out if you contact them or a payment fails.
Telling them is still sensible if there is any chance of a shortfall. A conversation with the lender’s support team in month one gives you choices. A missed payment in month three removes most of them and goes on your credit file for six years.
Will I lose my house if I am made redundant?
Not because of the redundancy. Repossession is a last resort after sustained arrears and a formal process, and lenders are expected to work through alternatives first.
The mortgage, the rate and the payment do not change when you are made redundant, only your income does
Lenders may offer term extensions, temporary interest only or a payment plan, none of them automatic
A new mortgage after redundancy needs evidence of the new job and a plain explanation of the gap
What support might my lender offer after redundancy?
Lenders may offer several things, and which ones depends on the lender, your circumstances and how far ahead you have called. The common ones are these.
A temporary switch to interest only. The payment drops to the interest alone for a set period, then returns to full repayment. On a £200,000 repayment mortgage with 20 years left this can take a few hundred pounds a month off the payment, though the capital you are not paying is still owed at the end.
A term extension. Spreading the same balance over more years lowers the monthly payment permanently, at the cost of more interest over the life of the loan. Some lenders will let you shorten it again once you are back in work.
A payment holiday or reduced payments. A short break from payments, or paying a smaller amount for a few months, with the shortfall added to the balance or repaid later.
Under the Mortgage Charter that most large lenders signed in 2023, a borrower who is up to date can ask to switch to interest only for six months or extend the term without a new affordability check, and reverse it within six months. Check with your lender whether they are a signatory and whether the option is still open.
Any of these can affect your credit file depending on how they are arranged and reported, so ask the lender exactly how they will record it before you agree.
How long will redundancy pay cover the mortgage?
Statutory redundancy pay is a week’s pay per full year of service between the ages of 22 and 40, and a week and a half per year from 41, with the weekly pay capped. Contractual redundancy from your employer may be more generous. Add your notice pay or payment in lieu of notice, then divide the total by your monthly mortgage payment plus essentials. That number of months is your runway, and it decides whether you need the lender’s help at all.
Does mortgage payment protection insurance cover redundancy?
If you hold mortgage payment protection insurance, or an income protection policy with an unemployment element, redundancy is usually the event it was bought for. Most policies pay the mortgage payment, sometimes plus a percentage, for 12 or 24 months after a waiting period of 30 to 90 days. Read the policy for the waiting period, the maximum benefit and the exclusions, because voluntary redundancy and redundancy that was known about when the policy started are commonly excluded.
Claim as soon as you have the redundancy notice. The waiting period runs from the date you stop being paid, not from the date you claim, and insurers want the employer’s letter, your contract and evidence of your job search.
Standard income protection, the kind that pays if you cannot work through illness, usually does not cover redundancy. Check which type you have.
If you have no cover, the lender conversation above and your own runway are what you have. For money worries beyond the mortgage, MoneyHelper is the free, government-backed service and I would point anyone there for debt guidance rather than try to give it myself.
Can I get a mortgage after being made redundant?
Yes, subject to the usual tests, once you have a new income. Lenders lend against income, so an application submitted while you are between jobs will not pass affordability. Once you have a signed contract for a new role, some lenders will accept it before you start, most want at least the first payslip, and a few want three months in the new job. The most common delay I see on employed cases is exactly this, an application made before the first payslip in the new role exists. If you want to talk through timing, the contact page has my number.
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If your fixed rate ends within six months or you have a new job lined up, send me your latest mortgage statement and the new contract and I will tell you which lenders will look at it and when.
What if my fixed rate ends while I am out of work?
A product transfer with your current lender is the route to check first. Most lenders will move an existing borrower onto a new product without a fresh affordability check as long as the loan is not increasing and the payments are up to date, which means being out of work does not necessarily stop you fixing again. A full remortgage to a new lender needs proof of income, so it is usually off the table until you are back in work. My article on product transfer against remortgage covers the difference.
If the fix ends before the new job starts, a product transfer holds the position and a remortgage can follow later once income is back and any early repayment charge on the new product has been weighed up.
When you do apply for a new mortgage, the gap needs a plain explanation on the application. Redundancy followed by a new permanent role is a story lenders see often and accept, provided the paperwork supports it: the redundancy letter, the new contract and the payslips. A probation period is accepted by some lenders and not others.
The right order for most people is: work out the runway, call the lender before any payment is at risk, claim on any cover, and leave the new mortgage application until the first payslip exists.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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