Will we lose our home?

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From Shelter:

What if I had to leave because of rent or mortgage arrears?
If you have lost (or may lose) your home because of rent arrears or mortgage arrears, it may be possible to take action to prevent homelessness by dealing with underlying financial problems.

If you are evicted because of wilful and persistent rent arrears or mortgage arrears, you can be found to be intentionally homeless in some circumstances.

In some circumstances, it may not be possible to avoid eviction - for example because your home is not realistically affordable for you. If you are in this situation, you may be still be able to show that the arrears were a result of something beyond your control, such as illness, redundancy or failures by the benefits authorities. If you can show that this is the case and that you did everything you could to save your home, the council should not consider you to be intentionally homeless.

Whether the council judge you intentionally homeless or not, you would be eligible for means tested housing benefit. You can find online the rate of LHA (local housing allowance) that you would get based on your household size, so that you can look for something within the limits and not have to worry about falling into arrears.