Before a mortgage lender takes you to court to repossess your home, it must follow the rules outlined in the pre-action protocol.
Rules your lender must follow
If you have mortgage arrears your lender can take you to court to repossess your home.
But there are rules that mean your lender can only do this as a last resort and after other options have been exhausted.
Your lender must treat you fairly and consider any reasonable requests you have to arrange to pay off your arrears. These rules are called pre-action protocol.
If your lender doesn't follow the rules it could affect the outcome of a repossession case against you.
Get legal advice about mortgage arrears and repossession as early as you can.
Before a lender can start action against you
Before taking any steps to repossess your home, your lender must try to discuss your finances with you and give you a reasonable chance to pay the arrears.
Your lender must also send you:
- the National Homelessness Advice Service (NHAS) booklet on mortgage arrears or
- the Financial Conduct Authority (FCA) leaflet on arrears or default
Both leaflets offer advice on what steps you can take to keep your home.
Your lender must communicate with you in a way that's clear and easy to understand. Tell them if you find it difficult to understand any information they send you.
Your lender must also give you details of:
- your payments over the past two years
- your monthly instalments
- the amount of your arrears
- how much is left to pay on your mortgage
- the interest or charges that will be added
The rules that apply to you
Some of the pre-action protocol rules also apply to you as a borrower. You'll need to show the court that you've kept in touch with your lender and that you've acted responsibly. This means you must not ignore phone calls and letters from your lender.
In turn your lender must consider any proposals you make for repaying the arrears and any other reasonable options you suggest for keeping your home.
If they don't accept your suggestions they must write to you within 10 working days to explain why.
If your lender comes up with a proposal for you to clear your arrears, it should be easy to understand and you should be given a reasonable amount of time to consider it.
Keep to any agreement you make with your lender. If you don't your lender can take you to court after giving you 15 working days' notice.
When your lender should delay court action
The pre-action protocol says that your lender shouldn't start court action if you've made a claim:
- under a mortgage payment protection policy and are likely to get a payment
- for support for mortgage interest (SMI) or Universal Credit for help with mortgage costs and are likely to get a payment
If these payments won't cover your monthly instalments you'll also need to show your lender that you can cover the shortfall.
Your lender should also delay court action if:
- you're getting help from your local authority under a mortgage rescue or homeless prevention scheme
- your income is about to improve enough to enable you to (for example you've been offered a better paid job or you're taking in a lodger)
- you have made a complaint to the Financial Ombudsman Service (FOS) about how your lender has dealt with your arrears
- you are taking steps to sell your home at a realistic price – read more from Which about selling your home
Delaying repossession while you sell your home
If your lender agrees to delay court action because you're selling your home you need to give them details of any offers you get and the Energy Performance Certificate (EPC), or proof that you've arranged for your property to be assessed.
You should give your estate agent and solicitor permission to contact your lender directly about the progress of any sale.
If you have tenants
The pre-action protocol doesn't cover buy-to-let mortgages. But your lender should check if you have tenants.They may have the right to stay on even if your home is repossessed.
What happens if your lender doesn't follow the rules
If your lender hasn't followed pre-action protocol the court could:
- give you time to negotiate with your lender by delaying the court hearing
- order the lender to pay your legal costs
- stop your lender from adding their costs on to what you already owe them
Get legal advice before the court hearing if you think your lender hasn't followed the rules.
If you think you might be at risk of losing your home, call Shelter's free advice helpline on 0808 800 4444 .