Mortgage arrears or problems paying your mortgage

Your mortgage lender will be keen to help and will talk through your options.

The Financial Conduct Authority (FCA) defines arrears within a regulated mortgage contract or home purchase plan as a shortfall equivalent to two or more monthly payments.

• tell you the total sum of your arrears
• list all the payments which you've missed or partly paid
• tell you the exact amount outstanding under your mortgage
• tell you the amount of any charges incurred because of missing any payments (and indicate any charges which may become due if the arrears isn't paid back).

Also, your lender must not seek repossession unless all other reasonable attempts to resolve the situation have failed, and they must give you reasonable notice before taking that action.

Lenders have to treat you fairly and consider any request you make to change the way you pay your mortgage.

• Offer to pay back what you can afford when you discuss your options with your lender – continuing to pay back some money is better than paying nothing and will help reduce your arrears.
• Consider how and when you can return to making your full monthly payments.
• Think about when you can afford to pay more to make payments in excess or higher than your normal monthly payment to pay down any arrears.

Depending on your circumstances your lender might also make suggestions for you, for example extending your mortgage term.

Don’t delay – it's important to get in touch with your lender as soon as possible.

Mortgage payment protection insurance, also called accident, sickness and unemployment insurance, can help with your mortgage repayments if your income has fallen because of redundancy, accident or sickness.

You might have taken it out when you got your mortgage – look through your mortgage paperwork and double check with your lender or the broker you used when you took out the mortgage.

Spending some time considering your spending habits will help you see if you can save money anywhere.

To help see where you can save cash, have a look at your outgoings in relation to what you have coming in then divide spending into essential and non-essential items.

Budgeting is essential if you’re struggling to meet outgoings. Here are just a couple of ways to cut back:

• Look at the Direct Debits that go out of your account each month – things like gym membership and magazine subscriptions. Now think about whether you’re getting value for money out of all of them. If not, consider cancelling them.
• Try listing the smaller non-essential items you buy each day – such as take-away coffees or drinks after work. Put them in order of priority. Pick off the lower priority items first and consider cutting them out one at a time.

For things like food and energy bills – try shopping around to get a better deal elsewhere.

However, think carefully before you cut back on insurance, especially life insurance.

Ask yourself whether spending a small amount on the premium is better than the risk of not having a pay-out should you die or paying thousands of pounds of your own money if anything were to happen to your home.

As well as speaking to your lender, get advice from one of the many free debt advice charities and organisations.

A trained money adviser from an independent agency, like Citizens Advice or Shelter, can give you free and impartial advice.

There are other charities that can help you talk through your situation and provide information on where to find solutions.

Use our Benefits Calculator to quickly find out what support you could be entitled to.

Depending on your circumstances you might qualify for certain benefits – and/or for government help towards your interest payments.

If you’re worried that you might lose your home as a result of missed repayments, charities can provide support and advice, and there is plenty of help elsewhere too.

Find more information on home repossession on Shelter or on Housing Rights if you're in Northern Ireland.

Your local council might also be able to offer support and advice.

Help is available from the moment you receive written notice from a creditor seeking the possession of your home.

The Housing Loss Prevention Advice Service can help you if you live in England or Wales and are at risk of being evicted from your property if your mortgage is in arrears.

A housing expert funded by the government will work with you to identify what has triggered the possession claim and recommend find solutions. They may be able to give you free legal advice on:

• mortgage arrears
• welfare benefits payments
• debt.

In the event you are unable to resolve matters and you are asked to attend a court hearing, a housing adviser can also provide free legal advice and representation at the court. Please arrive at least 30 minutes prior to your hearing and speak to the court usher and they will direct you to the adviser.

You can find your nearest Housing Loss Prevention Advice Service provider by typing in your postcode and ticking the box ‘Housing Loss Prevention Advice Service’ at find-legal-advice.justice.gov.ukOpens in a new window

If you know that your situation won’t change in the long term, think about selling your home yourself and renting or moving to a cheaper property.

If considering this option, ask your lender if you can stay in your property until you sell it and check if it offers help through an Assisted Voluntary Sale scheme.

But make sure you have a place to live before you move out. If you keep your lender up to date and do everything you can to sell it, they should give you a reasonable period of time to sell.

Get free debt advice if you’re thinking of resorting to any of the options below– the chances are, there’s a better solution and they’ll be able to help.

• Taking out an additional loan to pay your debts – these can reduce your monthly commitments, making them more affordable – but they can be very expensive over the long term and are often secured on your home. 
• Handing back the keys – you’ll still be responsible for the mortgage repayments before your home is sold, and possibly the outstanding balance if the money raised by selling your home isn’t enough to pay off what you owe.
• Sale and rent back schemes – this is where you sell your home to a company and rent it back from them. 

In June 2023, lenders agreed to a new mortgage charter providing support for residential mortgage customers affected by interest rate rises. These are:

If you’re worried about affording mortgage repayments, call your lender. Their highly trained staff can answer your questions and offer tailored support options. Asking for help won’t affect your credit score. However, some ‘forbearance’ options might be reflected on your fileOpens in a new window Make sure you ask your lender what the impact might be of any particular option.

Support could mean extending your mortgage term to reduce your monthly payments, offering a switch to interest only payments, and providing access to a range of other options, such as a temporary payment deferral or a part interest-part repayment mortgage. The right option will depend on your circumstances.  

You’ll be offered the chance to lock in a deal up to six months. You’ll still be free to apply for a better deal, if one is available, until your new mortgage deal starts.

Your home won’t be repossessed within 12 months from your first missed mortgage payment.

You can switch to a new mortgage deal at the end of your existing fixed rate deal without another affordability check. This is provided this is with your current lender and the terms of your existing mortgage agreement remain unchanged.  

You'll be able to switch to making interest-only repayments for six months or extending the term of your mortgage, which will lower your monthly payments. This could mean that you pay more interest over the term of the mortgage. Neither option will require a new affordability check by your lenders and you will have the option to switch back to your original mortgage term within the first six months. Switching won’t affect your credit score.