Mortgage Arrears and the Pre-Action Protocol

The Pre-Action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears in Respect of Residential Property (often just called the Mortgage Pre-Action Protocol) sets out the steps that mortgage lenders must take before starting court proceedings for possession. Courts take compliance with the Protocol seriously — a possession claim can be adjourned or dismissed if the lender has not followed it.

Under the Protocol, your lender must:

• Contact you as soon as you miss a payment to discuss the reasons for the arrears and your financial circumstances
• Provide you with written information about the arrears and any charges being added
• Consider reasonable proposals from you for repaying the arrears
• Explore all options to avoid repossession before starting proceedings — including forbearance arrangements
• Give you a reasonable period of time to seek debt advice
• Not start proceedings until at least 15 business days after sending you a formal warning about the possibility of proceedings

Before any court hearing, the lender must also file with the court a completed checklist showing how they have complied with the Protocol. If the court is not satisfied that the Protocol has been followed, it can adjourn the hearing to allow the Protocol steps to be completed, or dismiss the claim where the lender's failure to comply is particularly serious.

From your side, the Protocol expects you to respond promptly to your lender's communications, engage in discussions about your financial position, seek advice, and make realistic proposals for clearing the arrears. Ignoring your lender's letters makes your situation significantly worse.

Forbearance refers to the range of measures a lender can offer to help borrowers in financial difficulty avoid repossession. Under the Mortgage Pre-Action Protocol, lenders are expected to consider forbearance before starting proceedings. The Financial Conduct Authority's (FCA) Mortgage Conduct of Business (MCOB) rules also require regulated lenders to deal fairly with borrowers in arrears.

Common forbearance options include:

• Payment holiday: Your lender agrees to pause or reduce your payments for a set period — typically up to 6 months. Interest continues to accrue during a payment holiday, so the total debt increases, but it provides breathing space while you resolve a temporary income problem.
• Reduced payment arrangement: You pay a reduced monthly amount (often interest only) for a period while addressing the underlying problem. The missed capital payments are deferred and added to the total balance.
• Capitalisation of arrears: The arrears already accrued are added to the outstanding mortgage balance and spread over the remaining mortgage term. This increases your monthly payment slightly but clears the arrears immediately and allows the mortgage to continue normally.
• Mortgage term extension: Extending the length of your mortgage reduces the monthly payment. For example, extending from 20 years remaining to 25 years remaining can meaningfully reduce the monthly amount owed.
• Switch to interest-only: Temporarily switching from a repayment mortgage to interest-only reduces the monthly payment to just the interest element, with the capital balance remaining static.

You must ask your lender for forbearance — it is not automatically applied. Contact your lender's arrears team directly, explain your circumstances, and ask them what options are available. Get any agreement in writing.

If you cannot reach an agreement with your lender and the arrears cannot be resolved through forbearance, the lender may start possession proceedings in the County Court. You will receive a claim form (Form N5B) from the court, along with a hearing date. Do not ignore this — failing to attend the hearing will almost certainly result in a possession order being made against you.

At the possession hearing, the court has a range of options:

• Adjourn the hearing — if there is a realistic prospect of resolution (for example, you are awaiting a benefit decision or are in active forbearance negotiations), the court may give you more time
• Make a Suspended Possession Order (SPO) — the court makes an order for possession but suspends it on condition that you pay your normal monthly mortgage payment plus an agreed amount towards the arrears. As long as you meet these payments, you will not be evicted. If you breach the SPO, the lender can apply to the court to enforce the possession order without a further hearing.
• Make an outright possession order — usually made where there is no realistic prospect of the borrower meeting any payment arrangement. This gives the lender the right to evict you after 28 days (or a longer period if the court grants it)

Courts are generally reluctant to make outright possession orders where there is a realistic prospect that the borrower can address the arrears. Coming to court with a clear, realistic repayment proposal significantly improves your chances of getting a suspended order.

Support for Mortgage Interest (SMI) is a government loan scheme that helps homeowners on certain qualifying benefits meet their mortgage interest payments. SMI is not a grant — it is a loan secured against your property that must be repaid when you sell or transfer your home. The loan covers only the interest element of the mortgage (not capital repayments), and only up to a maximum capital balance of £200,000.

To qualify for SMI, you must be receiving one of the following benefits:

• Universal Credit
• Pension Credit
• Income-related Employment and Support Allowance
• Income Support
• Income-based Jobseeker's Allowance

There is a 9-month waiting period before SMI becomes available for working-age claimants (no waiting period for those on Pension Credit). The loan is paid directly to your lender and does not appear in your bank account.

Free debt advice is available from several organisations and can make a significant difference. Advisers can help you prepare a budget, negotiate with your lender, complete legal aid forms, and represent you at court hearings in some cases:

• StepChange Debt Charity: 0800 138 1111 (freephone)
• National Debtline: 0808 808 4000 (freephone)
• Citizens Advice: Local offices and online guidance
• Shelter: Housing debt specialists — 0808 800 4444