Missing a mortgage payment can feel scary, but acting quickly and speaking to your lender can help stop arrears from getting worse. Support options are often available, especially if you ask for help early.

In this guide, you will learn what happens if you cannot pay your mortgage and how to protect your home. We will cover:

• How to handle a missed mortgage payment and what to do if you fall into arrears.
• What support options does your lender offer to help reduce your monthly payments.
• How government benefits, such as Universal Credit and Support for Mortgage Interest (SMI) loans, can help you stay afloat

What are mortgage arrears and what it means for you?

Mortgage arrears occur when you miss one or more repayments after your mortgage has started. The shortfall is added to what you already owe, along with your usual monthly payment.

It is understandable to feel anxious about affording your home. But being in arrears does not mean you will lose your property immediately. They usually signal to your lender that you may need support and a repayment plan to help you get back on track.

Your home may be repossessed if you do not keep up repayments on your mortgage.

What does being in arrears actually mean?

If you are in arrears, it means you have missed one or more of your agreed mortgage payments and now owe your lender the outstanding amount. The term "payment in arrears" refers to the specific shortfall you need to pay to bring your account up to date.

How missed mortgage payments affect your credit score

A missed mortgage payment will usually be reported to credit reference agencies like Experian or Equifax within about 30 days. This can lower your credit score and remain on your credit file for up to 6 years, which may make it harder to borrow or secure competitive interest rates when remortgaging or applying for credit.

Immediate steps to take after a missed mortgage payment

Explaining your situation to your lender soon after a missed payment can help you agree on temporary support arrangements. They are expected to consider options if you are struggling to pay.

Contact your mortgage lender without delay

If you feel worried that you cannot afford your mortgage, contact your lender straight away. The Financial Conduct Authority (FCA) expects lenders to treat customers fairly and to consider support options, like temporary changes to your payments. 

Do not ignore any letters or emails from your lender, because they often explain your options and outline the next steps. Many lenders have dedicated teams who can help you understand what is realistic for you.

Exploring lender support options

Your lender may sometimes offer temporary changes such as interest-only periods, revised repayment plans, or even term extensions to make mortgage payments more manageable. Options depend on your circumstances, for example, whether your income loss is short-term or longer lasting. 

Temporarily switching to interest-only payments

Switching to an interest-only mortgage can lower your monthly payments because you temporarily pay only the interest, not the loan itself. This is usually a short-term option that can give you some breathing space while you work to improve your finances. 

Because the balance is not reducing, payments may be higher later, so you will still need to have a plan for repaying the full mortgage. If the new deal involves a variable rate, payments could also rise or fall over time.

Extending your mortgage term to lower monthly costs

Extending your mortgage term will spread your payments over a longer period, potentially reducing your monthly payments and easing short-term pressure. The trade-off is paying more interest overall.

Some lenders may offer this as a temporary form of support, with the option to review your situation later. You can learn more in our guide to extending a mortgage offer.

Refinancing or remortgaging

Remortgaging (or refinancing) just means switching to a new mortgage deal. If you have enough equity and meet a lender’s criteria, it may help reduce your monthly payments.

However, it may also involve fees, early repayment charges, or extending your mortgage term, which could increase the total amount you repay over time.

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People often remortgage to:

• secure a lower interest rate
• fix monthly payments for greater certainty
• release equity, for example to repay other debts

Releasing equity from your home to repay debts can reduce your monthly outgoings, but it may increase the total amount you repay over time and secure previously unsecured debts against your home.

Consolidating debts into your mortgage may cost more in the long run.

Example scenario (for illustration only)

How much you save will depend on your circumstances, any fees, and your lender's checks. If you are already in arrears, remortgaging can be more difficult and may involve early repayment charges. Some people start with a product transfer from their current lender, which is often quicker and requires less paperwork.

Government help with mortgage payments on benefits

If you receive benefits, you may be able to get government help to cover your mortgage interest payments through specific loan schemes. This programme helps people facing unemployment or long-term illness keep their homes.

Does Universal Credit count as income for a mortgage?

Some lenders may consider Universal Credit as part of your income when assessing affordability, although this varies depending on the lender and your overall financial situation. Usually, Universal Credit is only accepted if you also have another source of income, like a part-time job.

Lenders assess benefit income differently, so speaking to a broker can help you find those more open to it.

Is a Support for Mortgage Interest loan worth it?

A Support for Mortgage Interest (SMI) loan may be an option if you need help covering your mortgage interest. It is a loan secured against your home, with interest added over time, and is usually repaid when you sell or transfer ownership.

Whether it is suitable will depend on your individual circumstances, so it’s important to understand the full terms before applying. Full details are available on Gov.uk.

Practical strategies to manage wider debt

Managing wider debt means looking at your financial commitments and making sure your mortgage and other essential bills are prioritised. If credit cards or loans are making your budget tight, reducing those payments can help free up money to keep up with your mortgage. It is also worth checking if you have any insurance that could temporarily support you.

Begin by listing all your debts and what you can afford to pay. Free charities such as Citizens Advice or StepChange might be able to help you create a plan, negotiate with creditors, and agree on manageable repayments.

Even small reductions on other debts can make it easier to keep up with your mortgage payments. 

If you’re unsure which option is right for you, speaking to a qualified adviser can help you understand what’s suitable for your situation.

Your home may be repossessed if you do not keep up repayments on your mortgage.

If you would like help understanding your mortgage options, you can chat to an expert at Habito.

Habito is authorised and regulated by the Financial Conduct Authority (FRN 714187).

This article is for general information only and isn’t personal financial or investment advice.

Frequently asked questions

Can you get a mortgage while on benefits?

Yes, it is possible to get a mortgage while on benefits, but it may limit the number of lenders who are willing to consider your application. Most high-street banks will require you to have another source of earned income in addition to your benefit payments to show you can afford the loan.

Can the bank repossess my home immediately if I miss a payment?

Your bank cannot repossess your home following a single missed payment. Repossession is a legal process that takes several months and is only used by lenders as a last resort.

How many missed mortgage payments lead to repossession in the UK?

There is no set legal number of missed payments that immediately leads to repossession in the UK. Most lenders will start formal legal proceedings after three to six months of unresolved arrears, especially if you don’t communicate with them.

Can you pause your mortgage payments for a few months?

You may be able to pause your payments through a formal payment holiday agreed with your lender. Some lenders also offer more flexible informal arrangements that can be reviewed regularly. Remember that interest usually continues to build during any payment pause, which can increase your future monthly payments.

Will losing your job automatically lead to losing your house?

Losing your job does not mean you will automatically lose your home. There are safety nets such as lender forbearance, SMI loans, and income protection insurance that may help. Contact your lender as soon as possible to agree on a temporary support plan based on how long your income may be affected.

Is it possible to get mortgage debt forgiven in the UK?

Banks very rarely write off or forgive secured mortgage debt in the UK. If you find yourself unable to pay, the main alternatives are to sell the property to clear the debt or to discuss negative equity solutions with your lender.

Does contacting your lender about payment struggles impact your credit score?

Simply calling your lender to ask for advice will not affect your credit score. But if you enter into a formal support arrangement, like a payment holiday or paying less than your agreed amount, this will be recorded on your credit file. It is important to remember that a slightly damaged credit file is much better than losing your home.

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