Mortgage payment arrangements explained
Most mortgage arrears are sorted out by agreement, not in court. Here are the options your lender has to consider and how to make an offer it can work with.
Applies to: England & Wales
What to do now
- Build a realistic budget with the budget calculator.
- Make sure other priority bills are covered first with the Bill Prioritiser.
- Send the lender a dated written offer and keep a copy.
Options your lender must consider
| Option | How it works | Worth knowing |
|---|---|---|
| Arrears payment | Your normal payment plus a set amount until the arrears are cleared. | Only offer an amount you can keep up. |
| Term extension | The mortgage runs for longer, so each payment is lower. | You pay more interest overall. |
| Change of type | For example, a temporary switch to interest-only. | The balance does not fall while you pay interest only. |
| Deferring or waiving interest | Some interest is put off or written off for a time. | Ask how deferred interest is repaid later. |
| Lower rate or simple interest | The lender reduces the rate, or stops charging interest on interest. | Ask how long it lasts. |
| Adding arrears to the balance | The arrears are spread over the rest of the term. | The lender must not add arrears to the balance automatically if that would increase the interest over the term by £50 or more, or the monthly payment by £1 or more — it needs your agreement. |
The lender should pick what suits your circumstances, and it can offer other options too.
Making an offer
- Check you are getting all the help you are entitled to: benefits and grants check.
- Work out what is left after essential spending and other priority bills.
- Offer your normal payment plus a realistic amount towards the arrears, or explain why you need a temporary reduction.
- Say what caused the arrears and what has changed.
- Ask for the agreement in writing. If the lender says no, under the pre-action protocol it should give written reasons within 10 business days.
The Mortgage Charter
Lenders that signed the Mortgage Charter agreed to let customers switch to interest-only for six months, or extend the term and switch back within six months, without a new affordability check or any effect on their credit score. They also committed that nobody will be forced out of their home within 12 months of the first missed payment without consent.
Support for Mortgage Interest
If you get a qualifying benefit, you may be able to get a Support for Mortgage Interest loan towards the interest on your mortgage. It is a loan, repaid with interest when you sell or transfer the home, and it cannot pay arrears that have already built up. Tell your lender if you apply: the protocol says it should consider waiting before court action while the claim is decided.
Your credit file
Arrears and arrangements are usually reported to the credit reference agencies. Ask the lender how your arrangement will be recorded before you agree it.
If the lender refuses
Keep paying what you can and keep records. You can complain to the lender and then to the Financial Ombudsman. If the lender goes to court, the judge can still suspend possession if you can clear the arrears within a reasonable period — the hearing explained.
You never have to pay for debt advice. MoneyHelper (government-backed), StepChange, National Debtline and Citizens Advice all give free, confidential advice with no obligation.
Common questions
How much do I have to pay towards mortgage arrears?
There is no fixed amount. Offer your normal payment plus what you can realistically afford after essential costs and other priority bills, and show your budget.
Will a mortgage arrangement affect my credit score?
Arrears and arrangements are usually reported to the credit reference agencies. Options taken under the Mortgage Charter, such as a six-month interest-only switch, were agreed not to affect your credit score.
Can I switch to interest-only to lower my payments?
You can ask. Lenders must consider changing the mortgage type, and lenders that signed the Mortgage Charter agreed to allow a six-month switch to interest-only without a new affordability check.