If you're struggling to pay your mortgage, you're more at risk of being targeted by firms or individuals who won't be acting in your best interests, or by criminals who may encourage you to commit fraud.
If you’re worried about paying your mortgage[1], contact your lender as soon as possible about the support available. Remember, if an offer sounds too good to be true, it probably is, and you could end up seriously worse off.
Freemen on the land
Freemen on the land is the name given to people who make misleading and harmful claims that borrowers can't be held liable for their mortgages (and other taxes and debt), using arguments dating back to Magna Carta.
We're aware of mortgage holders in financial difficulty who are being misled by this online misinformation, often with serious financial consequences.
Some of these mortgage holders have paid others a fee to take their claims to court to stop their homes being repossessed. But none of these claims have succeeded as they're not legally valid.
Other people have ended up losing not just their homes but also a large chunk of their equity (the difference between your outstanding mortgage balance and the current value of your property).
You could end up liable to pay tens of thousands of pounds in legal and other costs from your mortgage lender.
If you're in financial difficulty, struggling to pay your mortgage and at risk of losing your home, beware of people telling you that you're not legally bound by your mortgage contract. Instead, you should speak to your lender.
There are other steps you can take[1] to deal with problems paying your mortgage. Even if you can't afford to stay in your home, your lender may be able to help you sell your home. That way you could get a better sale price, and any money you have left after the sale won’t be wasted in paying legal fees and other arrears and possession costs.
Promissory notes
Some websites and groups on social media are claiming that borrowers can avoid paying their mortgage by sending their lender a promissory note.
These notes either claim that another party, such as a trust, will make the mortgage repayments, or that the note itself should be accepted by the lender to repay the mortgage in full.
While these notes may be endorsed by a legal firm and notarised (at a cost to the borrower of around £500 or more), a promissory note is a promise to pay and is not an acceptable form of mortgage payment.
Lenders will return these notes and any other documentation to the borrower, often signposting them to acceptable types of mortgage repayment.
Borrowers sending in these notes are often in financial difficulties and pay for the notes in the mistaken belief that it will resolve their financial problems. But these notes are not a form of payment for mortgages or other debts, despite what others may tell you. If you send a promissory note to your lender, you will still have to repay your mortgage.
If you're struggling to pay your mortgage, do not pay for a promissory note. Real help is available. Contact your lender to find out more about the support available. You should also consider whether it would be helpful to get independent debt advice.
If you're struggling with money, you can get guidance on dealing with debt from MoneyHelper[2]. You can also use the Debt Advice Locator tool[3] to find free services in your area.
Quick sale offers
If you've fallen behind with your mortgage, or you’re worried about repossession, you may be contacted with a quick sale offer, and could end up losing thousands of pounds.
These offers usually involve companies buying your home at a discounted price in exchange for completing the deal quickly. The buyer may call these deals 'below market value', 'BMV' or 'distressed property sales'.
The discount is often a lot less than your property is worth and can be as much as 35% below the market value of the property.
These offers may include a promise to:
- Complete the deal within 48 hours.
- Pay you in cash.
- Help you avoid legal and estate agent fees.
- Guarantee the sale.
Some quick sale companies target people who are struggling to pay their mortgage. They may act in ways that are not in your financial interest, and could leave you with much less than you would have been entitled to.
You should always be cautious and check what you're being offered with Citizens Advice or an independent solicitor.
A quick sale may be helpful for some people, but there are other steps you can take to deal with problems paying your mortgage. These options might leave you better off, so make sure you contact your lender to find out more.
Sale and rent back
In some cases, you may be offered the option to stay in your property and rent it from an investor who buys it. This is known as a 'sale and rent back' agreement, and firms offering these agreements must be authorised by us.
If you deal with a firm that is not authorised, you may have no protection if things go wrong, and you could end up losing everything.
You can use the FCA Firm Checker[4] to find out if a firm is authorised and has permission for the service it's offering you. If you can't find a firm on the Firm Checker, contact us on 0800 111 6768.
Firms may offer you other solutions that appear to repay your debts and allow you to remain in your home without selling it. But we urge you to treat all offers like this with caution.
False sale prices
If the buyer or the seller of a property deliberately lies about the purchase price to a mortgage company, then this is fraud and can lead to prosecution.
If you're selling your home, the buyer may want to trick mortgage providers into lending the full amount for your property, rather than having to pay a deposit themselves.
For example, you may agree to sell your home for £120,000. But the buyer may tell the mortgage provider that you're selling it for £150,000.
The buyer can then request a loan of £120,000 and pretend that they will cover the rest with a deposit. But in fact, the lender will be covering the full cost.
This type of fraud could mean that the buyer is able to access better mortgage deals and avoid paying a deposit.
But misleading the lender in this way is breaking the law, and it may mean that you and the buyer face prosecution.
How to protect yourself
If you lie about the price of the property you're selling, you may be committing fraud. It could put the sale at risk, and you may even face prosecution.
If you're being asked to act in a way that makes you think there's fraud involved, you should report the matter to the police.
If you're receiving benefits, you should also know that overstating the price paid for your home could affect your payments. It may be assumed that you have more money than you do from the sale of the property.
