Last reviewed: June 2026
TL;DR- Mortgage arrears arise when one or more monthly payments are missed or short - the lender is required by FCA rules to contact the borrower and consider forbearance options before any enforcement action.
- Repossession is a last resort - FCA rules require lenders to exhaust all reasonable forbearance options before initiating possession proceedings.
- Borrowers in arrears should contact their lender proactively and seek free debt advice as soon as possible.
- Free and confidential debt advice is available from StepChange, Citizens Advice and National Debtline.
What Happens When Mortgage Payments Are Missed
Missing a mortgage payment does not trigger immediate repossession. FCA mortgage conduct rules (MCOB 13) impose a detailed framework for how lenders must deal with borrowers in arrears. Within a short period of a missed payment, the lender must: contact the borrower to discuss the reasons for the arrears; explain the options available; and provide information about free debt advice services. The lender must treat the borrower fairly and with appropriate sensitivity.
Missed payments are recorded on the credit file as arrears, which negatively affects the credit score and may affect future borrowing capacity. The arrears accumulate - each month a payment is not made or is short, the arrears balance increases by the shortfall amount. Interest continues to accrue on the outstanding balance including the arrears.
FCA Forbearance Requirements
FCA MCOB 13 requires lenders to consider a range of forbearance options proportionate to the borrower's circumstances before taking enforcement action. These options include: a temporary payment reduction; a payment holiday for a defined period; adding arrears to the outstanding balance (capitalising arrears) and extending the term; switching to interest only temporarily; and agreeing a repayment plan for the arrears over time. Lenders must not initiate possession proceedings while a repayment arrangement is being agreed or is being maintained.
The Possession Process
If forbearance options are exhausted without resolution, the lender can apply to court for a possession order. The court will consider whether the borrower has had adequate opportunity to remedy the arrears and whether the lender has followed FCA conduct rules. The court can grant a suspended possession order, which gives the borrower a final opportunity to maintain payments and a repayment plan before possession is enforced. Outright possession orders are granted where the court is satisfied no sustainable payment arrangement is achievable.
Even after a possession order is granted, the borrower retains the right to apply to the court to suspend enforcement if circumstances change and payments can resume. The Pre-action Protocol for Possession Claims by Mortgage Lenders (part of the Civil Procedure Rules) sets out the steps lenders must take before issuing court proceedings.
Where to Get Free Help
Borrowers in arrears should seek free debt advice immediately. The following organisations provide free, confidential advice: StepChange Debt Charity; Citizens Advice; National Debtline; MoneyHelper (government-backed financial guidance service). These organisations can negotiate with lenders on behalf of borrowers, help set up repayment arrangements and identify all available options including government support schemes.
Frequently Asked Questions
How many missed payments before repossession can start?
There is no fixed number of missed payments that triggers possession proceedings. FCA rules require lenders to engage with borrowers and exhaust forbearance options before applying to court. In practice, lenders typically allow several months of missed payments while attempting to engage the borrower and agree an arrangement. Borrowers who actively engage with their lender are treated more favourably than those who ignore contact. Repossession after just one or two missed payments (with engagement) is very rare.
Can I sell my property to clear mortgage arrears?
Yes. Selling the property is always an option to clear the outstanding mortgage and arrears from the sale proceeds. If there is equity above the outstanding mortgage and arrears, the surplus belongs to the seller. If the sale proceeds are insufficient to clear the full outstanding balance (shortfall), the borrower remains liable for the shortfall even after the property is sold - the lender can pursue the shortfall as an unsecured debt. Selling voluntarily typically results in a better sale price than forced sale at auction following repossession.
What support does the government provide for homeowners in arrears?
The government's Support for Mortgage Interest (SMI) scheme provides a loan (secured against the property) to eligible homeowners on qualifying benefits to help cover mortgage interest payments. Mortgage Rescue (where available locally) and other local authority housing support may also be available. MoneyHelper can advise on all available government support for homeowners in financial difficulty.
Does being in arrears mean I cannot remortgage?
Active mortgage arrears significantly restrict or prevent remortgaging. Most lenders decline applications from borrowers with current arrears. Once arrears are resolved and a clean payment record is re-established, remortgaging becomes possible but the adverse credit history of the arrears period will remain on the credit file for six years. Specialist adverse credit lenders may consider applications where arrears have been resolved, depending on the recency and severity of the arrears period.
