Mortgage Arrears: What to Do If You Fall Behind

Falling behind on your mortgage is one of the most worrying financial situations you can face. Your home is at stake, but you have rights and there are steps you can take to prevent repossession. This guide explains what to do if you can’t pay your mortgage.

What Are Mortgage Arrears?

Mortgage arrears are missed or reduced mortgage payments. They build up when you can’t keep up with your monthly repayments.

Why Mortgage Arrears Are Serious

Your mortgage is a secured debt, which means your home is used as collateral. If you don’t pay:

• Your lender can repossess your home
• Your home can be sold to pay off the debt
• You could still owe money if the sale doesn’t cover the full amount
• It damages your credit score for 6+ years
• You may find it difficult to get another mortgage

Important: Always pay your mortgage before other non-priority debts like credit cards or personal loans.

What to Do If You Can’t Pay

1. Contact Your Lender Immediately

This is the most important step. Don’t ignore letters or avoid calls. Lenders are required to work with you if you’re struggling.

What to tell them:

• Why you can’t pay (job loss, illness, relationship breakdown)
• How long you expect the difficulty to last
• What you’ve already done to try to manage
• How much you can afford to pay

Lenders have a legal duty to treat you fairly and consider your circumstances before taking action.

2. Request a Payment Holiday

A payment holiday lets you temporarily pause or reduce your mortgage payments. This can give you time to get back on your feet.

Important: A payment holiday isn’t free money. You’ll still owe the interest, and your monthly payments may increase afterwards. Only use this option if you genuinely need it.

3. Ask for Reduced Payments

If a full payment holiday isn’t suitable, ask if you can make reduced payments for a temporary period.

• Pay what you can afford
• Explain your circumstances clearly
• Get any agreement in writing
• Review the arrangement regularly

4. Check Your Income and Benefits

You may be entitled to help you didn’t know about:

• Universal Credit — if you’re on a low income or unemployed
• Housing Benefit — if you’re on a low income (legacy benefit)
• Support for Mortgage Interest (SMI) — government loan to help pay mortgage interest (see below)
• Payment Protection Insurance (PPI) — if you have a policy that covers mortgage payments

Your Lender’s Obligations

Your mortgage lender must treat you fairly. They can’t just repossess your home without following strict rules.

What Your Lender Must Do

• Contact you promptly if you miss a payment
• Explore options to help you manage your mortgage
• Consider your individual circumstances before taking action
• Send you a pre-action protocol letter before starting court proceedings
• Give you time to respond and get advice
• Only repossess as a last resort

What Your Lender Cannot Do

• Send bailiffs to your home without a court order
• Change the locks while you’re out
• Remove your belongings without a court order
• Threaten or harass you
• Start repossession proceedings before exploring other options

The Mortgage Charter

The Mortgage Charter is an agreement between the UK government and mortgage lenders. It gives you extra protections if you’re struggling to pay.

Under the Mortgage Charter, you can:

• Switch to an interest-only mortgage for up to 6 months (without a credit check)
• Extend your mortgage term to reduce monthly payments (without a credit check)
• Make overpayments without being penalised (up to 10% per year)
• Contact your lender for support without it affecting your credit score

Key points:

• You can use these options even if you’ve missed payments
• Lenders must offer these options before starting repossession
• Switching to interest-only or extending the term won’t affect your credit score if agreed with your lender
• You can switch back to your original terms when you’re ready

Support for Mortgage Interest (SMI)

Support for Mortgage Interest is a government loan that helps pay the interest on your mortgage if you’re receiving certain benefits.

How to apply:

1. You’ll be automatically assessed for SMI when you apply for Universal Credit or other qualifying benefits
2. You need to have a mortgage (not rent)
3. Contact your local Jobcentre Plus or check your Universal Credit journal

Important: SMI is a loan, not a grant. You’ll need to repay it eventually. Consider whether this is right for your situation.

Payment Protection Insurance (PPI)

If you have payment protection insurance on your mortgage, it may cover your payments if you:

• Lose your job (involuntarily)
• Become too ill to work
• Have an accident that prevents you from working

What to do:

1. Check your mortgage paperwork for PPI details
2. Contact your insurer to make a claim
3. Provide supporting evidence (medical reports, redundancy letter)
4. Keep paying what you can while waiting for the claim to be processed

Tip: If you were sold PPI and it wasn’t suitable for your needs, you may be able to make a complaint. Contact the Financial Ombudsman Service.

The Repossession Process

Repossession is a last resort. Your lender must follow a strict legal process before they can take your home.

Step 1: Arrears Build Up

You miss one or more mortgage payments. The lender will contact you to discuss the situation.

Step 2: Pre-Action Protocol Letter

If you can’t reach an agreement, the lender sends a pre-action protocol letter. This must:

• Explain the total amount you owe
• Give you 15 working days to respond
• Encourage you to get free advice
• Outline the options available to you
• Warn that repossession is possible if no agreement is reached

Step 3: Court Application

If you still can’t reach an agreement, the lender applies to court for a possession order. You’ll receive court papers and can:

• Attend the hearing to explain your situation
• Present evidence of your ability to pay
• Ask the court for time to pay

Step 4: Court Hearing

The judge will consider:

• Whether you can afford to pay
• Your personal circumstances
• Whether repossession is proportionate
• What alternatives are available

The court may:

• Adjourn the case — delay the decision to give you more time
• Make a possession order — give you a date to leave (usually 28 days)
• Make a suspended possession order — you can stay if you keep to a payment plan
• Dismiss the case — if the lender hasn’t followed proper procedure

Step 5: Warrant of Possession

If you don’t leave by the date in the possession order, the lender applies for a warrant of possession. Bailiffs will then be sent to evict you.

Step 6: Sale of Property

After eviction, the lender sells your property to recover the debt. If the sale doesn’t cover the full amount, you may still owe the shortfall.

Important: Repossession should only happen as a last resort. The court must be satisfied that the lender has tried everything else first.

How to Challenge Repossession

You have the right to defend yourself in court. Here are some defences and arguments you can use:

Possible Defences

• The lender hasn’t followed the pre-action protocol
• The lender hasn’t considered alternative options
• You’ve been in contact and trying to pay
• Your circumstances have recently improved
• You can now afford to pay the arrears

Asking for Time to Pay

Even if the court decides in the lender’s favour, you can ask the judge for:

• Time to pay — a realistic plan to pay off the arrears
• A suspended possession order — you stay if you keep to the plan
• An adjournment — more time to get advice or resolve the situation

What to bring to court:

• Details of your income and outgoings
• Evidence of any benefits you receive
• A payment plan showing how you’ll pay the arrears
• Letters from your lender about payments you’ve made
• Any medical evidence if illness has affected your ability to pay

Preventing Future Arrears

Once you’ve dealt with the immediate problem, take steps to avoid falling behind again:

• Build an emergency fund — aim for 3-6 months of mortgage payments
• Review your budget — cut non-essential spending
• Check your insurance — make sure you have income protection or life cover
• Set up a standing order — pay your mortgage automatically each month
• Review your mortgage — if rates have risen, consider remortgaging to a better deal
• Get advice early — if you think you might struggle, contact your lender before you miss a payment

Frequently Asked Questions

How many payments can I miss before repossession?

There’s no fixed number. It depends on your lender and circumstances. Some lenders start repossession proceedings after 3 months of arrears, but many will work with you for much longer.

Can I sell my home to pay off the mortgage?

Yes. You can sell your property at any time to pay off the mortgage. If the sale price is higher than the debt, you keep the difference. If it’s lower, you’ll need to pay the shortfall.

Will I lose my home if I miss one payment?

No. Lenders won’t repossess after one missed payment. They’ll contact you to discuss the situation and work with you to find a solution.

Can my lender take my other assets?

No. Your mortgage is secured on your property, not your other assets. The lender can only repossess your home if you can’t pay.

What happens to the shortfall if my home sells for less than I owe?

You remain legally responsible for the shortfall. The lender may pursue you for the remaining debt, which could lead to a county court judgment (CCJ).

How long does repossession take?

The process can take several months. From the first missed payment to actual eviction, it typically takes 6-12 months, depending on the court schedule and your circumstances.

Where to Get Free Help

Remember: You don’t have to face mortgage arrears alone. The sooner you contact your lender and get free advice, the more options you have to keep your home.