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What happens if I can no longer pay my mortgage?

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UKUpdated 6 October 2026 · Written by BuyMeWhiskey Editorial Team · How we check facts

Your lender must try to agree an affordable plan, such as a longer term, temporary interest-only or time to clear arrears, and can repossess only as a last resort; most big lenders have agreed not to force you out within a year of your first missed payment.

Before you call your lender, work out what payment you could afford. Use the mortgage repayment calculator to compare a longer term, interest-only and overpayment options.

Open the Mortgage repayment calculator

What happens when you first miss a payment

A missed or part-paid mortgage payment creates a payment shortfall. Once you're in arrears, FCA rules require your lender to write to you as soon as possible, and within 15 business days at the latest. The letter must include the MoneyHelper guide "Problems paying your mortgage", a list of the payments you've missed, the total shortfall, any charges added, the total you owe, and the charges you're likely to face if the shortfall isn't cleared.

If your payments are by direct debit, the lender can't try to collect more than two direct debits in a calendar month while you have a shortfall. If two months in a row fail for lack of funds, it must talk to you about whether that payment method still suits you.

What your lender must do

The FCA's rules for regulated mortgages (MCOB 13) say lenders must deal fairly with anyone who has, or may have, payment difficulties. That includes people who haven't missed a payment yet but tell the lender they're at risk. In particular, the lender must:

make reasonable efforts to agree a way to repay the shortfall, with a view to finding an alternative to repossession
allow a reasonable time to repay, with a practical plan that fits your circumstances; in suitable cases that can mean spreading arrears over the rest of the term
tell you about free, impartial debt advice and work with an adviser you appoint
grant a request to change your payment date or method, unless it has a good reason not to, and explain any refusal in writing
give you a reasonable time to consider any proposal

The lender must also consider, with your agreement, whether it's appropriate to extend the term, change the mortgage type (for example to interest-only for a period), defer interest or capital, reduce the interest rate, or add the arrears to the loan. It must explain what each option means for your total balance and how it will show on your credit file. It mustn't automatically add arrears to the loan where that would increase the interest over the term by £50 or more, or the monthly payment by £1 or more.

Repossession is a last resort

The FCA rule is blunt: a lender must not repossess unless all other reasonable attempts to resolve the position have failed. If no affordable arrangement can be made, it must give you a reasonable time to sell the property yourself. Before starting repossession action, it must give you an up-to-date written statement of what you owe, tell you to contact your local council about housing, and state clearly what it plans to do.

Under the government's Mortgage Charter, the signatory lenders, who make up about 90% of the market, agreed that a borrower won't be forced to leave their home without consent within a year of their first missed payment, except in exceptional circumstances. They also confirmed that simply contacting your lender for help and guidance won't affect your credit file. The Charter covers regulated residential mortgages, not buy-to-let.

If you get written notice that you need to leave, you can get free legal advice through the Housing Loss Prevention Advice Service, including representation at your hearing. Repossession law in Scotland is different.

Help from the government: Support for Mortgage Interest

If you get Universal Credit, Pension Credit or income-related ESA, you may get Support for Mortgage Interest (SMI). It's a loan, usually paid straight to your lender, that covers the interest on up to £200,000 of your mortgage, or £100,000 in some Pension Credit and older cases. It's worked out at a set rate, currently 3.66%. There's no credit check, but you repay it with interest when you sell or transfer your home.

Timing matters. On Pension Credit, SMI can start straight away. On Universal Credit you need 3 months in a row of UC first, and on income-based ESA you need 39 weeks. SMI doesn't pay off arrears you've already built up, and it doesn't cover insurance.

What to do now

Contact your lender early, ideally before you miss a payment. You have more options, and the lender has clear duties to help.
Work out a realistic budget and keep paying what you can. Even part-payments show good faith.
Get free debt advice. GOV.UK points to Citizens Advice, National Debtline, Shelter, MoneyHelper and your local council.
Check whether you can get SMI or other benefits, and whether you have mortgage payment protection insurance.
Never ignore court papers. Go to the hearing and ask for the free duty advice.

Tom's monthly payment under each option (£180,000 at 5%)

Worked example

Tom owes £180,000 on a repayment mortgage at 5% with 20 years left. His payment is £1,187.92 a month. After losing his job, he misses two payments, so his arrears are £2,375.84.

Option 1: repay the arrears over 12 months. £2,375.84 ÷ 12 = £197.99 extra a month, so he pays £1,385.91 a month for a year. This only works once his income recovers.
Option 2: temporary interest-only. £180,000 × 5% ÷ 12 = £750 a month, which saves £437.92 a month while he looks for work. The balance doesn't go down during this period.
Option 3: extend the term to 30 years. The payment falls to £966.28, but total interest rises from about £105,101 to about £167,860. The lower payment costs roughly £62,760 more over the life of the loan.
SMI: if Tom claims Universal Credit, after 3 months in a row SMI could pay interest on his £180,000 at 3.66%. That's £180,000 × 3.66% = £6,588 a year (£549 a month), paid to his lender as a loan secured on the home.

Use the mortgage repayment calculator to test these options with your own balance, rate and term.

What will my lender do if I miss a mortgage payment?#

Within 15 business days of your account going into arrears, your lender must send you the MoneyHelper 'Problems paying your mortgage' guide and a statement of the missed payments, charges and total debt. It must then try to agree an affordable way to repay the shortfall. Call it as soon as you can; contacting your lender early gives you the most options.

Can my lender repossess my house straight away?#

No. FCA rules say a lender must not repossess unless all other reasonable attempts to resolve the arrears have failed, and it has to go through the courts. Lenders that signed the Mortgage Charter have agreed not to force you out without your consent within a year of your first missed payment, except in exceptional circumstances.

Will telling my lender I'm struggling affect my credit score?#

Under the Mortgage Charter, contacting your lender for help and guidance doesn't affect your credit file. Missed payments and some formal arrangements are reported, though, and your lender must explain how any arrangement will appear on your file before you agree to it.

Can I switch to interest-only to lower my payments?#

Often, yes. FCA rules require lenders to consider changing the mortgage type, extending the term or deferring payments for borrowers in difficulty. Under the Mortgage Charter, borrowers who are up to date can switch to interest-only for six months without a new affordability check. Your balance won't fall while you pay interest only, so ask what happens when the period ends.

Can the government help pay my mortgage interest?#

If you get Universal Credit, Pension Credit or income-related ESA, Support for Mortgage Interest can pay the interest on up to £200,000 of your mortgage at a set rate, currently 3.66%. It's a loan you repay when you sell, and it doesn't cover arrears. On Universal Credit, it starts after 3 months in a row of UC.

Should I sell my home before it's repossessed?#

Selling yourself usually gets a better price and gives you more control than a repossession sale, and FCA rules say your lender must allow you a reasonable time to sell if no payment arrangement is possible. Get free debt advice first, because a sale may not be your only option, and work out whether the sale would clear the mortgage and any other secured debts.

Where can I get free help with mortgage arrears?#

GOV.UK points to Citizens Advice, National Debtline, Shelter, MoneyHelper and your local council, all of which are free. If you've received written notice to leave your home, the Housing Loss Prevention Advice Service can give free legal advice and represent you at the hearing. Avoid companies that charge for debt help.

Keep reading

Sources

Figures checked against these sources on 6 October 2026. If a rule changes, we update the page and its date.

General information, not personal financial advice. Rules depend on your circumstances; check the official source or speak to a regulated adviser before acting.