Mortgage Arrears & Repossession Rights

Falling behind on mortgage payments is genuinely stressful, but UK regulation places real, enforceable obligations on lenders long before repossession becomes a possibility. This guide covers exactly what your lender must try first, the 12-month protection most borrowers don't know they have, what actually happens if a case reaches court, and where to get free, expert help.

Figures below reflect the FCA's MCOB 13 rules, the Civil Justice Council's Pre-Action Protocol for Possession Claims, the August 2023 Mortgage Charter, and House of Commons Library briefings, current to mid-2026. This is general information, not financial or legal advice; contact your lender and a free debt advice service as early as possible if you're struggling.

1. What your lender must do before court action

Under the FCA's Mortgages and Home Finance: Conduct of Business sourcebook (MCOB), and the Civil Justice Council's Pre-Action Protocol for Possession Claims, a lender is required to treat repossession as a genuine last resort, not a default response to missed payments. Before any court action, the lender must contact you, discuss your situation, and consider reasonable proposals you make to resolve the arrears. Lenders are also expressly barred from threatening court action simply to pressure you into paying more than you can genuinely afford.

2. The forbearance options they must consider

• Extending the mortgage term, spreading the same balance over a longer period to reduce monthly payments.
• Switching temporarily to interest-only, reducing payments to interest alone for an agreed period.
• A payment deferral or part-payment arrangement, reducing or pausing payments for a short period while a longer-term plan is agreed.

3. The Mortgage Charter's 12-month protection

The Mortgage Charter, agreed between the government, the FCA, and mortgage lenders representing the large majority of the market from August 2023, includes a specific commitment: signatory lenders will not force a borrower to leave their home without their consent within 12 months of their first missed payment, barring exceptional circumstances. Notably, this protection applies even where a court has already granted a possession order, meaning the 12-month grace period doesn't end simply because a case has reached that stage. If a lender breaches this commitment, a borrower can complain to the Financial Ombudsman Service.

4. What actually happens if it reaches court

If arrears continue and no agreement is reached, a lender may apply to the court for a possession order. Even at this stage, the court doesn't automatically grant possession, and a lender must demonstrate to the court what steps it has taken under the Pre-Action Protocol before the case even reaches a hearing. Where an order is granted, it's genuinely worth knowing that a significant proportion of possession orders are suspended, meaning they are not enforced as long as the borrower keeps to agreed terms, typically a structured repayment plan covering the arrears. A possession order is a serious step, but it is not automatically the end of the process, and continuing to engage with your lender and the court remains worthwhile even at this stage.

5. The genuine current scale, in context

It's worth keeping the current picture in perspective. Mortgage arrears and repossessions remain well below the levels seen following the 2008 financial crisis: at the end of 2009, over 216,000 mortgages were in arrears of more than 2.5% of their outstanding balance, and nearly 49,000 properties were repossessed that year. Current figures sit considerably lower than that, even accounting for the interest rate rises of recent years. This isn't a reason to be complacent about a genuine, individual arrears problem, but it does mean the system, and the free help available within it, is generally coping with a smaller scale of difficulty than it was built to handle during the previous crisis.

6. Frequently asked questions

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