Mortgage arrears: how to deal with missed payments

Mortgage arrears can feel daunting, but they’re a common issue and, in many cases, there are realistic ways to stabilise your situation. The key is to understand what lenders typically look for, how missed payments may be recorded, and what you can do early to reduce the risk of things escalating.

This guide is aimed at home buyers who have missed a payment (or are worried they might) and want a clear, practical overview of next steps.

What counts as mortgage arrears?

Mortgage arrears are amounts you owe your lender because you haven’t paid your mortgage as agreed. They can build up over time and may include more than just the missed instalment.

Depending on your mortgage type and the lender’s process, arrears can include:

• Missing a monthly payment
• Paying less than the agreed amount
• Falling behind on an agreed repayment arrangement
• Not keeping up with required payments after an arrangement ends

Even if the arrears start small, they can increase due to additional charges and interest.

Missed payments vs arrears: what’s the difference?

People often use the terms “missed payment” and “arrears” interchangeably, but lenders may treat them differently.

• Late payment: a payment is missed but made up within a short period.
• Arrears: payments are missed for multiple periods, or you fall behind and the balance remains outstanding.

In practice, lenders usually focus on the pattern (how many times), the seriousness (how long and how much), and whether the issue is ongoing or has been resolved.

Why mortgage arrears happen

Mortgage arrears can occur for many reasons, and lenders will often want to understand the cause.

Common triggers include:

• Loss of income: redundancy, reduced hours, or difficulty finding work
• Illness or injury: time off work and increased costs
• Changes in interest rates: variable-rate or tracker mortgages can rise when rates increase
• Unexpected expenses: repairs, essential household costs, or medical bills
• Overcommitment: other debts (credit cards, loans) reducing what’s available for the mortgage

If you can explain what changed and what’s different now, it can help your lender assess the situation more accurately.

How lenders typically respond when payments are missed

When payments aren’t made, lenders generally try to understand your circumstances and whether there is a workable solution. If you don’t engage, the process can move towards more formal steps.

What often matters most is:

• Early communication: raising the issue sooner can lead to more options
• Your ability to pay going forward: lenders typically look for a sustainable plan
• Whether the arrears are temporary or likely to continue: stability and clarity are important

How missed payments can affect your credit file

Missed payments and arrears are often recorded with credit reference agencies. This can make future borrowing harder and may reduce the range of deals available.

It’s also worth noting:

• A single missed payment may have a smaller impact than repeated arrears.
• Ongoing or unresolved arrears can be more damaging than arrears that have been cleared.
• Consistency after the issue can help demonstrate improvement.

Keeping an eye on your credit report can help you understand what’s being recorded and whether there are any errors that need correcting.

Early warning signs to act on

If you recognise any of the following, it’s usually better to act before arrears build:

• You’re struggling to cover the mortgage alongside everyday bills
• You’re relying on credit cards or loans to manage essential spending
• You’re paying less than the mortgage amount (or planning to)
• You’re unsure how you’ll manage the next instalment

Options that may help you get back on track

The right approach depends on your circumstances, the mortgage type, and how long the arrears have been building. Lenders may consider different solutions, such as:

1) Repayment plan for arrears

A lender may agree to spread the arrears over time alongside your normal monthly payments. This can reduce the pressure of paying a large amount at once.

2) Temporary payment reduction (where available)

Some lenders may offer short-term support to help you stabilise. The exact structure varies and may be time-limited.

3) Extending the mortgage term

Extending the term can reduce monthly payments. The trade-off is that you may pay more interest over the life of the mortgage.

4) Interest-only arrangements (where suitable)

In some cases, a temporary or permanent move to interest-only may be possible depending on the mortgage and lender rules. This can lower monthly outgoings, but the capital balance still needs addressing.

5) Payment holiday (short-term support)

Where available, a payment holiday can provide breathing space for a limited period. It’s important to understand how interest may be treated during the break.

6) Support linked to income or welfare

If arrears are connected to reduced earnings or other financial pressures, there may be support available that helps with mortgage costs or household income.

7) Remortgaging or switching (with care)

If your situation improves, remortgaging may be an option. However, arrears and credit history can affect what’s available, and there may be costs to consider.

What to do if you’ve missed a payment (or expect to)

A structured approach can help you stay in control and communicate clearly.

1. Gather information Collect mortgage statements and details of what’s outstanding. Note the dates and amounts involved.

2. Work out what you can realistically afford Look at income, essential household costs, and any other debts. A plan that isn’t affordable can lead to further arrears.

3. Communicate with your lender early Explain what changed, what you can pay now, and what you expect your situation to look like in the near future.

4. Keep records Save notes of calls, letters, and any agreements reached.

5. Consider specialist support A mortgage adviser can help you understand which options may fit your mortgage type and arrears position, and how lenders may view the overall picture.

Legal protections and fair treatment

Borrowers have protections intended to ensure lenders handle arrears responsibly. While the exact process depends on the lender and circumstances, lenders are generally expected to:

• Provide clear information about missed payments and next steps
• Consider reasonable repayment arrangements before escalating
• Follow formal procedures if court action becomes necessary

In most situations, repossession is not an immediate outcome of a single missed payment. It typically follows a structured process.

For authoritative guidance, see:

• MoneyHelper – Mortgage arrears and repossession
• Citizens Advice – Mortgage arrears

The repossession process (in the worst case)

Repossession is usually a last resort. If arrears continue and no agreement is reached, the lender may progress through formal steps that can include notices and court involvement.

While timelines can vary, the broad stages often include:

• Formal notices: the lender communicates the arrears position and potential consequences
• Court proceedings: the lender may apply for permission to take possession
• Court decision: the court may grant an order that could be immediate or suspended depending on compliance
• Enforcement: if conditions aren’t met, further action may follow

If you reach this stage, urgent specialist support is particularly important.

How arrears can affect wellbeing

Mortgage arrears can create significant stress for individuals and families. It can affect sleep, concentration, and decision-making, and can strain relationships.

Common experiences include:

• Anxiety about losing the home
• Feeling overwhelmed by debt and uncertainty
• Tension at home due to financial pressure

Support can come from debt advice services, mental health charities, and trusted professionals. Getting help early can make it easier to manage the situation and engage effectively with your lender.

Summary: key steps to take

• Don’t ignore arrears—act as soon as possible.
• Communicate early with your lender and explain what’s changed.
• Focus on affordability when agreeing a repayment approach.
• Understand the potential impact on your credit file and future borrowing.
• Seek specialist support if you’re unsure what to do next.