# Struggling with mortgage payments: what lenders must do and the options

> If you fall behind or expect to fall behind on a mortgage, FCA rules require lenders to treat you fairly and to try other options before…

- URL: https://centiview.com/uk-money/mortgage-payment-difficulties-what-lenders-must-do
- Published: 2026-10-19T20:16:00.000Z
- Figures checked: 2026-10-19
- Edited by David A
- Topic: Mortgages (UK)
- Publisher: Centiview (Persie Ltd, London)
- General information only, not financial advice

If you fall behind or expect to fall behind on a mortgage, FCA rules require lenders to treat you fairly and to try other options before repossession. This guide explains those options, the court process and where to find free help.

## Who this guide covers

This is general information for people with a regulated mortgage on a home they live in, in the UK. The lender rules described here come from the Financial Conduct Authority (FCA), the regulator of mortgage lenders, and apply across the UK. The court steps are different by nation: Citizens Advice and GOV.UK describe the process for England, and GOV.UK says home repossession law in Scotland is different and points to mygov.scot. Northern Ireland has its own arrangements and is not covered here. It is general information, not advice on your own case, and figures were checked on 19 October 2026 (2026/27 tax year).

## What the FCA rules require of lenders

The FCA Handbook, in its mortgage chapter known as MCOB 13, says a lender must deal fairly with customers who have, or may have, payment difficulties, and must have a written policy for doing so. You do not need to have missed a payment first: the rules also cover customers who say they are at risk of a shortfall. A lender may not try more than two direct debits in a calendar month where there is already a shortfall, and it must not pass on costs from repeated failed attempts. It must also give you a reasonable time to consider any proposal, and if it refuses a reasonable request to change your payment date or method, it must explain why in writing.

The rules say the lender must try to agree a way of repaying the shortfall and consider alternatives to repossession. Taking possession of the home is allowed only after all other reasonable attempts to resolve the position have failed. Where it is appropriate and you agree, the lender must consider options such as extending the mortgage term, changing the type of mortgage (for example from repayment to interest-only for a while), deferring or waiving some capital or interest, reducing the interest rate, or using a government support scheme it takes part in. The list is not exhaustive. Lenders must not pressure you with excessive calls or letters.

> **Key numbers** Direct debit attempts allowed with a shortfall: no more than 2 a month. Written arrears statements: at least once a quarter. Capitalising arrears counts as material if it adds £50 or more to total interest or £1 or more to the monthly payment. Source: FCA Handbook MCOB 13. Checked 19 October 2026.

## Spreading and capitalising arrears

Arrears are the payments you have missed. One common approach is to add a small extra amount to each regular payment until they are cleared. Capitalising means adding the arrears to the loan balance so they are repaid over the rest of the term. The FCA rules prohibit lenders from capitalising automatically where the effect is material, which the Handbook defines as adding £50 or more to the total interest over the term, or £1 or more to the monthly payment, taken alone or together with earlier capitalisations. It can still be appropriate if you can afford it, faster repayment options were considered and it is in your best interests.

## A worked example

These figures are invented for illustration. Suppose a regular payment is £800 a month and two payments are missed, so the arrears are 2 x £800 = £1,600. If the lender agrees to clear them over 8 months, the extra is £1,600 divided by 8 = £200 a month, so the payment becomes £800 + £200 = £1,000 for 8 months and then returns to £800. Spreading it over 16 months instead would add £100 a month, a payment of £900, but the arrears would last longer.

## Help from the benefits system

Support for Mortgage Interest (SMI) is help with the interest, not the capital, on a mortgage or loan for your home, and it is paid as a loan that must be repaid with interest when you sell or transfer the home. GOV.UK says you must receive Universal Credit, Pension Credit or income-related Employment and Support Allowance. For Universal Credit, payments start after 3 months in a row; for income-based Employment and Support Allowance after 39 weeks in a row; for Pension Credit from the date it starts. GOV.UK says SMI usually covers interest on up to £200,000 of borrowing (£100,000 with Pension Credit, or for some who started a qualifying benefit before January 2009), at a rate it currently gives as 3.66%. For example, interest on £150,000 at 3.66% is £150,000 x 0.0366 = £5,490 a year, or £457.50 a month. SMI cannot pay missed payments (arrears) or insurance.

## If the lender goes to court

Citizens Advice says that in England the lender must go to court before it can take your home, and normally has to give at least two weeks' written notice before applying. A court may make an outright possession order, or a suspended one that lets you stay while you keep to an agreed arrangement. The lender needs a warrant of possession before an eviction, and Citizens Advice says bailiffs must give at least 14 days' notice of the date and time. It says an agreement is still possible after court action has started. GOV.UK says the free Housing Loss Prevention Advice Service can help if you have a written notice about losing your home, and an adviser can represent you at the hearing.

## Common mistakes and where to get free help

- Waiting until arrears build up: Citizens Advice says lenders normally write within about 15 days of a missed payment, but it can be worth contacting the lender sooner.
- Treating all debts alike: mortgage arrears are a priority debt, because the home is at stake.
- Assuming SMI covers missed payments: it does not.
- Ignoring court papers: attending the hearing may be an important chance to put your case.

Free, impartial help is available from Citizens Advice, MoneyHelper, StepChange, National Debtline and Shelter. If you think a lender has not followed the rules, you can complain to it, and if you are unhappy with its final response the Financial Ombudsman Service, which is free to use, may be able to look at the complaint. Mortgage arrears charges are among the complaints it says it can help with.

## Check before you act

Rules, rates and court procedures change and differ by nation, so it can be worth confirming the details on the official pages linked below, or with a free adviser, before relying on this guide.

### Sources
- [FCA Handbook, MCOB 13.3 Arrears and payment shortfalls](https://handbook.fca.org.uk/handbook/MCOB/13/3.html)
- [FCA Handbook, MCOB 13.5 Dealing with customers in arrears](https://handbook.fca.org.uk/handbook/MCOB/13/5.html)
- [GOV.UK, Support for Mortgage Interest: what you'll get](https://www.gov.uk/support-for-mortgage-interest/what-youll-get)
- [GOV.UK, Support for Mortgage Interest: eligibility](https://www.gov.uk/support-for-mortgage-interest/eligibility)
- [GOV.UK, Home repossession: get advice](https://www.gov.uk/repossession)
- [Citizens Advice, Dealing with mortgage arrears](https://www.citizensadvice.org.uk/debt-and-money/help-with-debt/dealing-with-urgent-debts/dealing-with-mortgage-arrears/)
- [Citizens Advice, Eviction for mortgage arrears](https://www.citizensadvice.org.uk/debt-and-money/mortgage-problems/eviction-for-mortgage-arrears/)
- [Financial Ombudsman Service, Mortgages](https://www.financial-ombudsman.org.uk/consumers/complaints-can-help/mortgages)