How to protect your home in case of income loss

Your home is often among your most important assets – it provides security for you and your family. Assessing how you’d keep up with mortgage repayments if your income suddenly stopped could improve your financial resilience.

According to a survey from HomeOwners Alliance (8 September 2025), 46% of mortgage holders would struggle to keep up with repayments for six months after losing their income. If you’re unable to keep up with your mortgage repayments, you could risk losing your home.

While many people think “it will never happen to me”, it’s impossible to know what will occur in the future.

More people than you expect could find themselves in this position. For example, Macmillan Cancer Support estimates that almost 3.5 million people are living with cancer in the UK in 2025, and someone receives a cancer diagnosis every 90 seconds.

Suffering from a long-term illness could place your family at risk if you haven’t considered how you’d pay your mortgage. Here’s how to protect your home.

Calculate what income gap you’d need to bridge

A useful first step is to understand what costs you’d need to meet if your income unexpectedly stopped. Alongside your mortgage, you may want to consider other expenses, such as household bills or grocery shopping.

It’s also worth checking your employment contract. Some employers will continue to pay your salary or a portion of it for a defined period if you’re unable to work. This could provide peace of mind and might affect the next steps you take.

The steps you can take to protect your home

Build an emergency fund to cover short periods of absence

Building an emergency fund is a good place to start when you want to improve your financial resilience.

How much you should save will depend on your circumstances. However, a good rule of thumb is between three and six months of essential outgoings. This money should be held in an easy-access account, so it’s readily available should you need it unexpectedly.

Take out appropriate financial protection to cover you if you have a long-term illness

While your savings might be adequate for an illness that prevents you from working for a few months, financial protection could be valuable if you’re affected by a long-term illness.

There are two main options to consider:

1. Income protection, which would provide you with a regular income if you’re too ill or injured to work until you return to work, retire, or the term ends
2. Critical illness cover, which would pay you a lump sum if you were diagnosed with an illness covered by the policy.

You should note that not all illnesses are covered by financial protection, and how comprehensive a policy is can vary. It’s important to be aware of when you’d be covered and any exclusions before taking out financial protection.

Take out life insurance if you have dependents

If you have dependents who would struggle financially without your income, you might also want to consider life insurance.

Life insurance would pay your beneficiaries a lump sum if you passed away during the term. This money could be used to pay off the mortgage, fund day-to-day expenses, or create a nest egg for your child when they reach adulthood.

Build a financial buffer by overpaying your mortgage

Finally, you might want to consider overpaying your mortgage. This could allow you to build up a financial buffer on your mortgage. If you fell ill, you might be able to take a mortgage repayment holiday as a result, which could give you a chance to recover.

As a bonus, if you don’t need to take a repayment holiday, overpaying will typically allow you to clear your mortgage quicker and pay less interest overall.

Check how much you can overpay before you might face an early repayment charge (ERC). Often, you can repay 10% of the outstanding mortgage balance before an ERC is applied, but this isn’t always the case.

Even if you haven’t made overpayments, if you’re unable to work and are struggling to meet mortgage repayments, it’s worth contacting your provider. Many lenders will allow a repayment holiday if certain conditions are met.

Get in touch to talk about financial protection

If you have any questions about how to use financial protection to safeguard your home and family, please get in touch.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Note that life insurance and financial protection plans typically have no cash in value at any time, and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.