Mortgage Arrears

2 July 2014

Falling into mortgage arrears and facing losing your home is stressful and frightening. You might be feeling isolated and overwhelmed, but there is help available and falling into arrears doesn't have to lead to repossession.

Prioritise your mortgage

If you're in mortgage arrears, make meeting your monthly repayment your biggest financial priority.

The longer you leave talking to your mortgage provider and the longer you miss payments, the higher your likelihood of eventually losing your home.

See if there are any expenses that you can cut down on so you have more money to put towards your mortgage payment. If you have other debts which are putting a strain on your budget and affecting your ability to repay your mortgage, it's worthwhile seeing if you can reduce these payments.

Check if you have insurance

You may have taken out mortgage payment protection insurance (MPPI). These policies cover mortgage payments in case of unemployment, sickness or accident.

If you're unsure whether you have this protection, check in your initial mortgage paperwork or with your provider.

Check if you're entitled to benefits

Check that you are claiming all the government benefits or assistance that you are eligible for. These can make a significant difference to your income and in some cases qualify you for government mortgage support.

The Support for Mortgage Interest (SMI) programme can cover your interest payments if you're claiming income-based Jobseeker's Allowance (JSA), income-based Employment and Support Allowance (ESA), Income Support or Pension Credit.

If you live in Wales, some local authorities have a Mortgage Rescue scheme, while the Scottish government run several programmes to help people stay in their homes.

Negotiate with your mortgage provider

Speak to your provider as soon as you're in mortgage arrears. Let them know if there are any exceptional circumstances which are contributing to being behind on your payments, such as redundancy, sickness, relationship breakdown or death of a partner.

They want you to stay in your home and are legally obliged to discuss what your options are to avoid repossession.

Depending on your situation, these can include any of the following:

Interest only mortgage

If you currently have a capital repayment mortgage, your provider may be willing to let you just cover the interest until your financial situation has recovered.

Extend your mortgage term

You can reduce your monthly repayments by extending your mortgage term. Although this will increase the amount you pay in interest over the term of your mortgage, once your finances have recovered you can negotiate to reduce the term again or make overpayments

Payment holiday

Some mortgages offer the option to take a payment holiday. Often you need to have overpaid in the past, but if your financial situation is likely to recover you may be able to agree to make up payments in the future.


If you know that you are going to be unable to meet your mortgage repayments in the long-term it can be better to be honest with your provider about this and arrange to sell the property yourself, rather than waiting for a court-ordered repossession.

This gives you the option of staying in your home until the sale is complete and tends to raise more money than auctioning off your house after repossession. As you will still be liable for any outstanding balance on what you owe to your mortgage provider after the sale of your property, you want to make sure you get the best possible price for it.

We are unable to give advice about mortgage arrears but if you have other debt which is threatening your ability to make your mortgage payments, call one of our experienced advisors for free advice.

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