Finance Editor, Kael Tripton Ltd - LBS MBA - Verified against FCA Handbook: 14 June 2026
Quick answer
MCOB 13 requires mortgage lenders to contact you immediately if you miss a payment, consider all reasonable alternatives to repossession, and refer you to free debt advice. Repossession is a last resort under FCA rules. The Pre-Action Protocol for Mortgage Possession also applies before any court proceedings.
What Must Your Mortgage Lender Do If You Miss a Payment?
Direct answer
Can my mortgage lender repossess my home if I miss a payment?
No -- not immediately. Under MCOB 13 (handbook.fca.org.uk/handbook/MCOB/13/), lenders must contact you, consider payment arrangements, refer you to free debt advice and exhaust all reasonable alternatives before initiating repossession proceedings. Repossession is explicitly a last resort under FCA rules.
FCA Handbook - MCOB 13.3.1 - Verbatim Rule Text Source: handbook.fca.org.uk
A firm must deal fairly with any customer who is in arrears or difficulties with his mortgage. A firm must not repossess a property unless it has been unable to reach a reasonable arrangement with the customer.
Contact your lender immediately
Do not wait for the lender to contact you. Call or write as soon as you know you cannot make a payment. Lenders have more flexibility if you engage early.
Ask about a payment arrangement
Request a temporary reduction in payments, payment holiday, switch to interest-only or mortgage term extension. The lender must consider these under MCOB 13.
Contact free debt advice
National Debtline (nationaldebtline.org), StepChange (stepchange.org) and Citizens Advice can provide free, independent advice. The lender must refer you to these under MCOB 13.
Check eligibility for Support for Mortgage Interest
If you are on Universal Credit, Pension Credit or Income Support, you may qualify for the DWP SMI loan scheme.
If the lender starts possession proceedings -- get legal advice
The Pre-Action Protocol requires lenders to allow you time for legal advice. Contact a solicitor or your local Citizens Advice Bureau immediately.
Related KT guides
Frequently Asked Questions
What must my mortgage lender do if I miss a payment?
Under MCOB 13 of the FCA Handbook, mortgage lenders must treat customers in payment difficulties fairly. The lender must contact the borrower as soon as a payment is missed, provide information about the arrears handling process, consider whether a payment arrangement is appropriate before initiating any enforcement action, and only repossess as a last resort. As of June 2026, Consumer Duty (PRIN 12) adds a further obligation to consider the customer's individual circumstances and deliver good outcomes.
Can my mortgage lender repossess my home immediately if I miss a payment?
No. MCOB 13 requires lenders to exhaust all reasonable alternatives before commencing repossession proceedings. The lender must: contact the borrower to discuss the arrears, consider extending the mortgage term, consider switching to interest-only for a period, consider a payment holiday or arrangement, and refer to free debt advice organisations. Repossession is a last resort under FCA rules and must also follow the pre-action protocol for mortgage possession claims under Civil Procedure Rules.
What is the Pre-Action Protocol for Mortgage Possession Claims?
The Pre-Action Protocol for Mortgage Possession Claims (part of the Civil Procedure Rules) requires lenders to take specific steps before issuing court proceedings including: informing the borrower of the arrears amount and what must be paid to clear them, providing information about available assistance including government schemes (Support for Mortgage Interest), considering reasonable proposals for repayment, and allowing the borrower reasonable time to seek independent legal advice. Courts can adjourn possession hearings if the lender has not followed the protocol.
What is Support for Mortgage Interest (SMI)?
Support for Mortgage Interest (SMI) is a UK government loan scheme (administered by DWP) that helps homeowners who are on certain qualifying benefits (Universal Credit, Pension Credit, Income Support) to pay the interest on their mortgage. It is provided as a government loan (not a grant) secured against the property, repayable with interest when the property is sold. It covers interest on loans up to PS200,000. As of June 2026, the scheme is available for both residential mortgages and home purchase plan finance.
Can I claim mortgage payment protection insurance under MCOB?
Mortgage Payment Protection Insurance (MPPI) is a separate insurance product. If you have MPPI, your insurer covers your mortgage payments in specified circumstances (redundancy, accident, sickness). The FCA regulates MPPI under ICOBS and MCOB. If your MPPI insurer refuses a valid claim, the same ICOBS 8 fair claims handling rules and FOS complaint rights apply as for any other insurance product.
Primary sources
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