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Mortgage notice of default

If you miss one or more payments to your mortgage or loan, your lender could serve you with a notice of default stating that you have defaulted on your mortgage or loan agreement.

If you have received a notice of default on your mortgage, talk to an adviser immediately. It may be possible to stop or delay the repossession process at any time.

What is a notice of default on a mortgage?

A notice of default is a legal document that will state that:

  • you have failed to pay one or more instalments of your mortgage or loan - this is the default
  • you have one month in which to pay the missing instalment(s).

See what a notice of default looks like.

You have one month from the date that you are sent the notice to clear the outstanding arrears.

You should be sent the notice of default by recorded delivery. A copy of the notice will also be sent to anyone living in your home advising them of their rights. If you are an occupier of the home, not the borrower, you may have rights where you are a tenant, spouse or partner of the borrower.

Section 11

If a lender serves you with a notice of default they have to tell the council. This is done by sending the council a section 11 notice which informs them that your lender intends to repossess your property and you could end up being homeless.

When the council receives the notice they might get in touch to offer to help you. Depending on your situation, the council may offer to intervene and try and stop the repossession or give you advice about your housing options if you do become homeless.

What can I do if I have received a notice of default?

Pay the outstanding balance

You can pay the outstanding balance within the one month time limit. Talk to a money adviser to help you decide if you can afford to do this.

Negotiate a repayment agreement

If you can't clear the outstanding balance within the one month time limit, but you do have money that you can pay towards the arrears on a regular basis, you could try to negotiate a repayment arrangement with your lender.

Apply to the mortgage to rent scheme

The mortgage to rent scheme is run by the Scottish Government. The scheme aims to help people, whose homes are at risk of being repossessed, to stay in their homes.

If you apply successfully for the mortgage to rent scheme, your home will be bought by a council or a housing association, but you will continue to live there as a tenant.

If you're not eligible for the mortgage to rent scheme, there may also be a not-for-profit mortgage rescue scheme operating in your area, however, be extremely wary of private companies offering 'sale and rent back' schemes.

What can I do if I think the default notice is wrong?

If you think that the default notice is wrong, for example, because the amount of the arrears is incorrect, you can object to the notice at the sheriff court. You must do this within 14 days of the day the notice was sent and you'll need the help of a solicitor.

What happens once the one month time limit is up?

If you have not cleared your arrears or come to a repayment arrangement within one month of receiving the notice of default, it is likely that your lender will want to got to court to repossess your home.

Lenders must first serve you with a calling-up notice and complete the pre-action requirements before they can go to court for repossession. This means that they must:

  • give you clear information about the terms of your lending agreement; such as the amount that you owe including any arrears
  • take reasonable steps to avoid repossession by agreeing with you arrangements for future payments under the lending agreement
  • not take you to court where you are taking reasonable steps to stick to the lending agreement 
  • give you information on how to get advice on managing your debts and persuade you to contact your local council.

If your lender is planning to go to court, you will be sent an initial writ and a section 24 notice.

Your lender cannot sell the property with you in it, so if you do not leave voluntarily, they will also have to get an ejection order from the sheriff court, telling you that you have to leave.

Scotland map Housing laws differ between Scotland and England.
This content applies to Scotland only.
Get advice if you're England

The important points

  • A notice of default is a legal document.
  • You have one month from the date that you are sent the notice to clear the outstanding arrears.
  • If you think that the default notice is wrong, for example, because the amount of the arrears is incorrect, you can object to the notice at the sheriff court.
  • If you have not cleared your arrears or come to a repayment arrangement within one month of receiving the notice of default, your lender may decide to to got to court to repossess your home.

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