IVA Advice Guide on Mortgage Arrears and Payment Difficulties

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Advice for Managing Mortgage Arrears

IVA.TV have reproduced the Crown Copyright Guide on Managing Mortgage Arrears. Arrears on a mortgage can be extremely stressful as it can often lead to repossession proceedings and the risk that you may lose your home. We can also offer advise on how to manage your other bills in order to help make your mortgage more affordable. Your mortgage is a Priority Debt that needs to be paid before other less important bills.

Guide on Mortgage Arrears and Payment Difficulties:

Difficulties with paying your mortgage – what to do, who to contact and who can help.

If you can’t meet your mortgage repayments, or you’re worried you might fall behind, it’s important to contact your lender as soon as possible. Lenders have procedures for tackling payment difficulties and they’ll try to help. You can also get free independent advice from other organisations.

Contact your lender and agree a plan

Mortgage lenders are keen to help their customers sort out any payment difficulties. Also, the law says they must treat you fairly and take your circumstances into account. They may be able to come to a payment arrangement with you.

We can also advise on helping you reduce your other creditor commitments to help make your mortgage more affordable.

If you’re struggling to make the payments

Depending on your payment history and whether your difficulties are likely to be long or short term, your lender might agree to:

  • reduce your payments for a set period
  • charge you interest only for a while, if you’ve got a repayment mortgage (usually you pay capital and interest)
  • give you a ‘payment holiday’
  • extend your mortgage term to reduce your payments

If you’re already in arrears

If you’ve already fallen behind, your lender will suggest a way to pay off the arrears gradually, alongside your usual payments. If you can’t meet the extra payments, you may be able to delay them for a while or add them to your loan. Again, it depends on your track record.

Always pay what you can

Pay as much as you can manage every month. Keeping up regular payments (even if they vary) shows that you’re committed. Your lender’s more likely to treat you sympathetically and you’ll minimise the arrears charges too.

If you took out your mortgage on or after October 31 2004

The Financial Service Authority (FSA) regulates most mortgages taken out from this date. Under FSA rules lenders must treat you fairly and send you regular statements to keep you informed about your current arrears position. There are also rules covering what the lender must do if it intends to repossess your home.

FSA guidance on mortgage arrears (PDF document, 334K) (opens new window)

If you don’t keep up your repayments

It’s very important that you don’t ignore any payment problems. Mortgages are ‘priority debts’, which you should pay off first as your lender could repossess your home and sell it to get their money.

Working out how much you can afford

Your lender can help you work out how much you can afford, but you may prefer to do this yourself. A good starting point is to write down all your income and outgoings (apart from the mortgage) and see what you’ve got left. The Financial Services Authority (FSA) has an online budget calculator you can use.

IVA.TV can advise on helping you reduce your other creditor commitments to help make your mortgage more affordable.

Can I get financial help?

If you’ve lost your job or can’t work because of illness
If you’ve lost your job or you’re too ill to work, check whether you’ve got ‘mortgage protection insurance’ to cover your payments. The insurance payments may not start straight away – so contact your insurer as soon as possible.

Benefits that might increase your income
It’s worth checking if you’re entitled to benefits such as Working Tax Credit, Child Tax Credit or Council Tax Benefit. They can make a real difference to your income and help with your mortgage payments.

Working Tax Credit:

1. Are you aged 25 or over?
2. Do you work over 30 hours a week?
3. Do you earn less than £11,700 if you’re single or £16,300 with a partner?
If you answered yes to all three questions, you could be eligible to claim Working Tax Credit!

Child Tax Credit:

Child Tax Credit (CTC) is a means-tested allowance for parents and carers of children or young people who are still in full-time non advanced education or approved training. You don’t have to be the child’s parent to be eligible but you must be the main person responsible for them.

Are you eligible?

You may get CTC if you’re responsible for at least one child under 16 or young person in full-time education at school or college, or who’s doing approved training on a specified programme like Entry to Employment.
Tax credits are based on your household circumstances, so you’ll need to give HM Revenue & Customs (HMRC) information about:

  • your income
  • your partner’s or civil partner’s income (if you have one)
  • the children in your family


How to claim

Call the helpline and ask for a claim form. Simply fill in your details and send it back to HM Revenue &Customs (HMRC). They will do all the rest. If HMRC have any questions they will contact you.

They will then send you a letter telling you how much money you're entitled to and start paying this directly into your bank or building society account.

All you have to do after this is tell HMRC of any changes to your circumstances.
To claim call 0845 300 3900.

At IVA.TV we review your eligibility to Tax Credits as part of our IVA Review.

More about tax credits

Mortgage shortfalls after repossession

If your lender repossesses your home, they’ll sell it to get their money back. But if it sells for less than you owe them, they may want you to pay back the rest of the debt (the ‘mortgage shortfall’). This is no longer a ‘priority debt’, which means your lender can’t claim any more of your possessions or assets. But they can try to recover the debt for a long time – up to 12 years.

For further advice please contact IVA.tv.

Information in the above IVA Advice Guides and Debt Advice Guides includes extracts from Crown Copyright Advice Guides Direct Gov UK


Common Mortgage Misspellings: Morgage, Morgages, remortgage, remortgages, re-mortgages, re-mortgage, remorgage, remorgages.