Dealing with mortgage arrears
If you cannot afford your mortgage, there are things you can do to reduce your payments. If you have mortgage arrears, get money and debt advice to reduce them. Tell your lender what you're doing to deal with the arrears to stop them trying to repossess your home.
If you’re worried about repossession, get money and debt advice as soon as possible.
A money and debt adviser can help you manage your money and improve your household income. They can negotiate on your behalf with your mortgage lender.
If you get a repossession notice, get advice on your options immediately. Contact a Shelter Scotland adviser.
Always prioritise paying your mortgage
Always pay your mortgage before non-priority debts. Non-priority debts are things like credit cards, store cards and overdrafts.
If you cannot pay the full amount, pay as much as you can. This shows your lender you’re willing to put things right. It could delay or stop them trying to repossess your home.
If you have a joint mortgage
Both you and the other person on the mortgage are liable for paying. Even if someone moves out, they're still responsible.
Work out your finances
To see where you could reduce household costs, use a budgeting calculator on Money Helper.
To increase your income, check if you’re eligible for any benefits or tax credits. Use a benefits checker on Turn2Us.
Negotiate with your lender
Contact your lender as soon as possible. Tell them:
why you've missed payments
what you're doing to deal with the arrears
when you can start repaying the arrears
Ask your lender to agree to a repayment plan
Make sure you can afford the repayment plan. If you cannot work out a repayment plan yourself, a money and debt adviser can help you.
In your proposal, you should include:
why you're in arrears
how you'll pay back the arrears
what you've done to improve your finances, such as budgeting
details of any money and debt advice you're getting
how long you think it'll take to repay the arrears
Ask your lender for extra time to pay if you need it. You can ask to reduce the amount you pay temporarily or take a payment holiday until you’re able to pay again.
If your lender does not accept your proposal
If your lender does not agree to your repayment plan, keep paying what you can.
Make sure to put your offers of repayments in writing and keep copies of all written communication with your lender.
If your lender takes you to court this proof could help stop them from repossessing your home.
Check your insurance policies
Check if you have mortgage payment protection insurance. This can cover mortgage payments if you cannot work because of:
Check the terms of your policy. It might not cover you immediately, and might only pay your costs for one or two years.
Use a comparison site to see if you can reduce your insurance costs.
Change your mortgage agreement to manage the arrears
Extend your mortgage term
You can get more time to pay your mortgage back. This is called extending the mortgage term. This could make your payments are smaller.
Add the arrears to your mortgage
You can ask your lender to add the arrears to your mortgage. This means the amount you have to pay back will be higher, so make sure you can afford the larger payments.
Reduce your mortgage interest payments
You can ask your lender to reduce the mortgage interest until you can afford to pay it again.
Get a loan to cover your mortgage interest payments
If you get certain benefits, you could qualify for Support for Mortgage Interest (SMI). This can pay the interest on your mortgage.
SMI is a loan and there’s a charge for interest, so you need to pay both the money back and the interest.
You could get SMI if you get:
income-based Jobseeker’s Allowance
income-related Employment and Support Allowance
Universal Credit - if you're getting Universal Credit while working full-time or you're self-employed, you may not be eligible
Check GOV.UK for full eligibility and how to apply for Support for Mortgage Interest.
Change your mortgage lender
You can consider switching to a different mortgage lender. There may be limits to doing this if you already have arrears. Speak to a mortgage adviser before you switch.
Changing who you bank with
If you have a bank account with your mortgage lender, they can take any money that comes into your account to pay your mortgage arrears. This process is called setting off.
To stop your lender doing this, set up an account with a different bank. This lets you control what you pay.
Taking in a lodger to help pay your mortgage
You can rent out part of your home to increase your household income. You might need permission from your mortgage lender. It could also affect any benefits you get.
Check your responsibilities as a landlord if you take in a lodger.
Applying to the Home Owners’ Support Fund
Using these schemes you can either sell your home or a share of it. You must use the money you get to pay off your arrears.
The Mortgage to Shared Equity scheme
When using this scheme, the Scottish Government buys a stake in your home, and you keep a share.
Your home will be valued before an offer is made. You can refuse the offer if you do not think it’s high enough.
If you accept the offer, the Scottish Government will own part of your home. You can buy back part or all of the stake in your home after 2 years.
If you sell your home, the Scottish Government will take its share of the sale price.
The Mortgage to Rent scheme
When using this scheme, you sell your home to a housing association and stay in your home as a tenant. You’ll have a Scottish secure tenancy which gives you strong tenants’ rights.
Your home should be bought for market value. This is the amount you’d get if you sell your home to an individual.
If your arrears are higher than the market value of your home, you'll have to pay off the remaining debts yourself.
Before you apply to either scheme
You must get money and debt advice to make sure the scheme is right for you. An adviser will help you apply.
You can apply if:
you cannot reach an agreement with your mortgage lender
you've paid less than your agreed mortgage amount for at least 3 months
your total arrears are at least one monthly payment
you cannot get help through UK Government support schemes
you might still lose your home even if you do get help from the UK Government support schemes
Check mygov.scot for full eligibility for the Home Owners’ Support Fund.
If you decide to sell your home to pay off your arrears
If you sell your home yourself, you're likely to make more money than if you allow your lender to sell it.
You'll have to pay the costs of selling your home, including a valuation and solicitor fees.
If selling your home does not cover all your arrears, you might need your lender’s permission to sell. A money and debt adviser can help negotiate with your lender if they refuse.
Giving up your home so your lender can sell it
You can move out and give up your keys to allow your lender to sell your home. This is called voluntary surrender. You must continue to pay your mortgage until your home is sold.
You should only consider voluntary surrender as a last resort before repossession.
To voluntarily surrender your home, you must complete a form saying that:
you no longer live at the property
it is empty
you agree to the voluntary surrender
that the agreement is given freely
You also need the written consent of your partner or spouse.
Usually your home will not sell for market value, as homes are often sold at auction. This means you could still have arrears on the mortgage once it's sold, which you’ll have to pay off.
Finding somewhere else to live if you sell your home
Ask the council for a housing options meeting if you need help to find somewhere else to live. They can help with:
finding a private let
applying for housing with the council or a housing association
Follow our guidance if you're looking for somewhere else to live.
If you have nowhere to go, you may be legally homeless. You do not have to be living on the streets to be homeless.
Check your rights and what to do if you are homeless or threatened with homelessness.
If you have mortgage arrears charges
Your mortgage lender may charge you if you miss payments. These should only cover the administration costs of processing your arrears.
If you think these charges are too high or unfair, write to your lender. Ask them to break down the costs.
If you still think they're too high, explain why and ask for a refund. If they do not agree, make an official complaint. Check your lender’s complaints policy so you know how to complain.
If you’re unable to get the charges reduced by complaining, you can try to claim them back in court. If the amount is less than £5000, you can use a simple procedure action to get the money back. Follow Citizens Advice guidance on using simple procedure.
Last updated: 4 October 2022