How to pay off mortgage arrears
You can offer to pay back missed mortgage payments in regular instalments over time.
You can do this at any stage.
It's best to speak to your lender as soon as you can but you can also make an offer at a repossession hearing.
Step1Get your paperwork together
Gather anything that shows your income and spending, for example:
bank and loan statements
benefit letters
payslips
Make sure you have evidence of any changes in your situation. For example, a copy of an employment contract if you have a new job.
Keep everything together in a file and make copies if you can. Your lender or a judge could ask to see them.
Step2List your income and spending
Use our template to record your income, spending and debts:
Word template: Income and spending (docx 25kb)
OpenDocument template: Income and spending (odt 18kb)
Note down all the money that you get each month.
Include your partner's income if you live together.
Write down your:
wages
benefits and tax credits
child support payments
any extra income, for example, money from lodgers
Be realistic and accurate about how much you spend.
Include all your normal spending on:
mortgage, council tax and other bills
food and household items
travel costs
childcare
clothing
Check bills, bank statements and payslips if you are not sure of amounts.
Do not include payments towards your mortgage arrears. These are covered by priority debts.
Check your totals
If your income is more than your spending, sort out your priority debts next.
If your spending is more than your income, ask a debt adviser for help.
Speak to a duty adviser if you have a repossession hearing in court.
Step3Sort out your priority debts
Your mortgage is your most important priority debt.
Your lender will usually delay repossession action if you can show you are prioritising your mortgage arrears and can pay them off over time.
Other priority debts include:
loans secured on your home
gas and electricity
council tax
TV licence
Priority debts have the most serious consequences if you do not pay them.
They are not always the debts with the highest interest rates or the ones that have been passed to debt collection companies.
Non priority debts
Non priority debts affect your credit rating but there are less serious consequences if you cannot pay these debts.
Non priority debts include:
water bills
credit cards
buy now pay later agreements
loans not secured on your home
You could offer token payments of £1 a month as a short term option while dealing with mortgage arrears and other priority debts. Debt Camel website has more on token payments.
A non priority debt can become a priority if the company you owe money to gets a county court judgment (CCJ) against you and you do not pay.
This is because the company can get a charging order. This puts your home at risk of repossession. Citizens Advice have more on charging orders.
Ask a debt adviser about breathing space.
Breathing space is a scheme that can stop payment demands for a set amount of time while you get debt advice.
Step4Work out a payment offer
You can offer a regular monthly amount that you can afford.
Do not feel pressured to pay a large lump sum or monthly payments that you cannot afford.
A court can often stop repossession of your home if you show that you can repay the arrears by the end of the mortgage term.
How to calculate a minimum payment offer:
Amount of arrears ÷ number of months until mortgage end = minimum payment
Example: You have £3,000 arrears and have 10 years (120 months) until the end of your mortgage term. Divide £3,000 by 120.
You could offer £25 a month towards the arrears.
Step5Make a repayment offer to your lender
Send your payment offer to your lender.
Include your income and spending record to show that your offer is realistic and affordable.
If your lender has not started court action yet they must look at your offer.
If your lender refuses your offer
Your lender must write to you within 10 working days and explain why.
Your lender could suggest another plan. They must give you a reasonable time to respond.
Find out what lenders must do before starting court action.
If you have a repossession hearing
Tell the judge about your payment offer.
Take your income and spending sheet, and evidence such as payslips and bank statements.
Show it to a court duty adviser if you do not have legal representation already.
They can check your paperwork for free and help you speak to the judge.
Need more help?
National Debtline have a budget planner you can use. It's easy to fill in and tells you the information you need to include.
StepChange have resources to help prepare a monthly budget.
MoneyHelper have an online budget planner and a tool to help prioritise payments.
Last updated: 14 April 2023
