Mortgage Arrears: What to Do If You Can’t Pay Your Mortgage in the UK

Falling behind on mortgage payments can feel overwhelming—but you are not alone, and there is help available. Mortgage arrears are a serious issue, but with early action and clear communication, many homeowners can find a manageable solution.

This guide explains what mortgage arrears are, what rights you have, how UK banks respond, and the steps you can take to protect your home and credit score.

What Are Mortgage Arrears?

Mortgage arrears occur when you miss one or more full monthly mortgage payments. Even a short delay can result in arrears, which means you owe your lender money and are behind on your mortgage agreement.

The longer the arrears go unpaid, the more serious the situation becomes—potentially leading to repossession in extreme cases.

How Quickly Can Mortgage Arrears Escalate?

In the UK, most lenders begin formal action after two missed payments. However, this varies depending on the lender’s policies and whether you’ve contacted them early to explain the problem.

Timeline Example:

Early engagement with your lender is key to stopping things from reaching this stage.

Common Reasons for Falling Into Arrears

Mortgage arrears can happen to anyone. Some of the most common causes include:

• Job loss or reduced hours

• Unexpected bills or emergency costs

• Illness or family care responsibilities

• Divorce or separation

• Cost of living increases

• Rise in interest rates (especially after fixed-term deals end)

Even a short-term cash flow issue can affect mortgage payments if not addressed quickly.

How UK Lenders Typically Respond

Banks and mortgage lenders in the UK are regulated by the Financial Conduct Authority (FCA) and must treat customers in arrears fairly. This means they should:

• Contact you promptly and clearly

• Give you time to discuss your situation

• Consider affordable repayment options

• Avoid court action unless necessary

Example:

Halifax, part of Lloyds Banking Group, offers tailored support and urges customers to call their Arrears Management Team before missing a second payment.
NatWest offers “payment holidays” or term extensions on a case-by-case basis.

Every bank will review affordability and ask about your income and outgoings before deciding what help they can offer.

Your Rights as a Borrower in Arrears

As a homeowner, you have legal rights:

• You cannot be evicted without a court order

• Lenders must consider reasonable alternatives before court

• You are entitled to a clear breakdown of arrears and charges

• You can apply for financial hardship schemes or breathing space

Government-backed protections such as the Mortgage Charter, introduced in 2023, allow certain borrowers to:

• Switch to interest-only payments for 6 months

• Extend their mortgage term to reduce monthly payments

• Avoid repossession proceedings for 12 months after a missed payment

What You Should Do If You Miss a Payment

1. Don’t ignore the problem – Missed payments don’t disappear, and delaying action makes things worse.

2. Contact your lender immediately – Be honest and ask about support options.

3. Review your finances – Create a budget and identify where you can cut costs.

4. Check for government support – You may be eligible for Support for Mortgage Interest (SMI).

5. Speak to a free debt adviser – Organisations like StepChange or Citizens Advice can help negotiate with lenders.

Options to Deal with Mortgage Arrears

Your lender may offer one or more of the following:

What Is a Repayment Arrangement?

A repayment arrangement is a formal plan agreed with your lender where you repay the arrears in affordable monthly instalments, in addition to your normal mortgage payments.

Example:
You’re £1,200 in arrears and agree to pay £100 extra per month for 12 months, on top of your usual payment.

Lenders often prefer this solution if you can demonstrate stable income and realistic budgeting.

Can Mortgage Arrears Affect Your Credit Score?

Yes—mortgage arrears are reported to credit reference agencies and can severely impact your ability to borrow in the future.

• Even one missed payment will be noted

• Arrears may remain on your credit report for six years

• You may struggle to remortgage or apply for other loans

However, keeping to a repayment plan can show lenders you’re acting responsibly, which helps repair your credit over time.

What If Repossession Proceedings Begin?

Repossession is a last resort and can take many months. You still have options before and even during the court process:

• Apply for a repayment plan

• Ask for court to delay repossession

• Propose a voluntary sale

• Seek legal help to defend the action

Many people facing repossession are able to stop the process by showing a commitment to catch up on payments or arranging alternative finance.

Where to Get Free Help and Advice

There are several trusted UK charities and organisations offering free support:

Final Thoughts: Don’t Wait—Act Early

Mortgage arrears are serious, but they don’t have to lead to losing your home. The sooner you act, the more options you’ll have. Lenders are legally required to offer support and consider fair alternatives—and thousands of homeowners each year manage to recover from arrears and stay in their homes.

✅ Talk to your lender
✅ Seek free advice
✅ Work out a budget
✅ Stay engaged—ignoring letters or calls won’t make the problem go away

If you need guidance, start with a free assessment at StepChange.