How to deal with mortgage arrears

Draw up a financial statement

A financial statement is a record of your monthly income and spending, including bills and debt repayments.

It's an important document to prepare when negotiating with your lender or to show the court at a repossession hearing.

What your financial statement should look like

Ideally your financial statement should show that you have:

  • enough money coming in each month to cover your normal outgoings

  • money left over to repay your mortgage arrears in affordable monthly instalments

Get debt advice if your financial statement shows that your mortgage is still unaffordable or you cannot repay the arrears.

Get help to write it

Debt advisers use the Standard Financial Statement. This is recognised by most lenders and creditors but is not available to the public online.

You can use the National Debtline budget planner instead.

It's easy to fill in and tells you the information you need to include.

You can:

  • complete it online and print out a copy for your lender

  • download and print off a blank version and fill it in with a pen

  • save it and update it if your situation changes

Information to include

Your financial statement must be an accurate record of all your income and spending.


List all money that comes into your household each month. Include your partner's income if you live together.

For example:

  • wages

  • benefits or tax credits

  • child support payments

  • rental income from lodgers


Your spending records should include everything you pay for each month.

It is a good idea to organise your costs into fixed and flexible costs.

Fixed costs normally include costs that you must pay at a set time, such as your:

  • mortgage

  • council tax

  • TV licence

  • gas, water and electricity bills

Flexible costs include bills where you can easily change the amounts and times that you pay. For example, food and clothing costs.

Be honest and realistic about your spending. Some costs vary over a year which makes them hard to estimate. You still need to put a figure in your statement.

Example: Add a monthly estimate of about £15 to cover clothing costs even if you do not think you spend anything.

Last updated: 31 October 2019

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