Life sometimes throws unexpected financial and personal challenges our way and the concern that you might not be able to cover a mortgage payment is always a major worry for any homeowner. Understanding what happens if you miss mortgage payments is important not to worry you, but to know the typical process in the UK and crucially the steps you can take to manage the situation proactively.

We’ll explain the consequences of missing mortgage payments, from the initial impact to more serious outcomes. We’ll also provide some advice about what to do if you find yourself struggling. Remember, ignoring the problem is never the answer; understanding what happens if you miss mortgage payments can actually empower you to get help early.

 

 

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The immediate impact of a missed mortgage payment

If you miss a mortgage payment lenders usually act fast. Here’s what you can generally expect in the short term:

Communication from your lender

Your bank or building society will contact you shortly after the payment due date has passed to find out why the payment wasn’t made. This might be by phone, letter or email. It’s critical you engage with this communication.

Potential fees

Most mortgage agreements include terms for missed payment fees. These charges will be added to the amount you owe. You should check your mortgage terms and conditions document to understand what fees apply to your specific loan.

Impact on your credit score

A missed mortgage payment will almost certainly be recorded on your credit file with the main UK credit reference agencies (Experian, Equifax & TransUnion). This negative mark will lower your credit score, making it harder and potentially more expensive to obtain credit (things like loans, credit cards or even new mortgage deals) in the future. This is a significant result of what happens if you miss mortgage payments.

Find out more – what credit score do you need to buy a house?

What happens if payments continue to be missed? (arrears and escalation)

If you miss several payments, you will fall into ‘mortgage arrears’. This means you owe your lender for past unpaid instalments. At this stage the situation becomes more serious but lenders are still required to try and work with you.

Entering mortgage arrears

Once you are officially in arrears, your lender will intensify their efforts to contact you to discuss the situation and your intentions for repayment.

Lender comms and support

Lenders have a regulatory obligation to treat customers in financial difficulty fairly. They should try to understand your circumstances and discuss possible solutions which might include:

  • Agreeing a repayment plan: This could involve temporarily increasing your monthly payments to gradually catch up on the arrears over an agreed period.
  • Changing how you pay: For example switching payment dates if that helps with your cash flow.
  • Temporarily switching to interest-only payments: If your mortgage allows and you can afford it, this might lower your payments for a short time (though the capital balance won’t reduce).
  • Extending the mortgage term: This would lower your monthly payments by spreading the remaining loan over a longer period although you would pay more interest overall.
  • Capitalising the arrears: In some cases the arrears might be added to the total mortgage balance to be paid off over the remaining term. This will increase your overall debt and future payments.

Legal action as a last resort

If you don’t engage with your lender or if an agreed repayment plan fails and arrears continue to build, they may begin formal legal proceedings. This is a very serious stage in what happens if you miss mortgage payments. This process usually involves sending you formal default notices setting out the amount owed and giving you a deadline to pay. If payment isn’t made they can then apply to the court for a possession order.

The most serious consequence: repossession

At the end of the day, repossession is the ultimate and most severe outcome of failing to meet your mortgage obligations.

The repossession process

If the lender obtains a possession order from the court, it gives them the legal right to take ownership of your property. This can eventually lead to eviction. The lender will then sell the property to try and recover the outstanding mortgage debt arrears and any legal or sale costs.

What happens after repossession?

It’s important to understand that if the sale of the repossessed property does not raise enough money to cover the total amount you owe (including the mortgage balance arrears fees and costs) you may still be liable for the remaining shortfall.

The long-term impact of missing mortgage payments

Even if you avoid repossession, missing mortgage payments can have lasting negative effects. The process will impact your credit score, typically for six years. This can make it very difficult to get new lines of credit.

In addition, any future mortgage applications will be more challenging with fewer lenders willing to consider you. You may also only be able to borrow at much higher interest rates.

(Find out more – what mortgage can I get with my salary?)

Finally, the stress and emotional toll of facing mortgage difficulties can be significant and long lasting.

What to do if you miss (or think you will miss) a mortgage payment

If you are struggling or anticipate you will struggle to make a mortgage payment, proactive communication and seeking appropriate help are absolutely key.
Here’s what you should do:

  • Contact your lender immediately: Don’t wait for them to contact you. Explain your situation honestly and as early as possible. They have a responsibility to try and help you find a solution.
  • Seek free independent debt advice: Organisations like Citizens Advice offer expert impartial and confidential advice. They can help you create a budget, negotiate with your lender and explore all your options.
  • Review your budget carefully: Identify any areas where you can cut back on non-essential spending to free up funds.
  • Don’t ignore letters or calls from your lender: Failing to communicate will only make the situation worse and limit the support options available.
  • Understand your mortgage terms: Check your mortgage agreement for any specific clauses related to missed payments fees or support options.

Understanding what happens if you miss mortgage payments should motivate you to take these steps quickly if you face difficulties.

OneDome is here to help

Choosing a mortgage is complex but OneDome is here to help. If you have any questions about the specifics of mortgages, the wider mortgage process or want tailored advice on the different types of mortgages that suit your situation you can:

Your home may be repossessed if you do not keep up repayments on your mortgage.