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It can be possible to remortgage with mortgage arrears, but it is usually harder than with most other types of adverse credit. Historic arrears that have been cleared, followed by a clean payment record, are generally viewed very differently from arrears you still owe today. With current arrears, many lenders will not consider a new mortgage until the account is back up to date.
If you are behind now, the most useful first step is often to talk to your current lender rather than look elsewhere. Lenders must treat struggling borrowers fairly and consider options such as a payment arrangement. Free, impartial debt advice is also available, and getting help early gives you more choices.
Why lenders treat mortgage arrears seriously
A missed mortgage payment tells a new lender something very specific: you have fallen behind on the same type of borrowing it is being asked to provide. For that reason, many lenders view mortgage arrears more seriously than a missed payment on a phone contract or credit card.
Missed mortgage payments are recorded on your credit file and stay for 6 years from when each marker was recorded. Lenders can also see the pattern: how many payments were missed, how recently, and whether the account is now up to date.
Current arrears vs historic arrears
| Current arrears | Historic arrears | |
|---|---|---|
| What it means | You still owe missed payments now | Missed payments that have since been cleared |
| Shows on your credit file | Yes, with the account shown as behind | Yes, for 6 years from each missed payment |
| How a new lender may view it | Many lenders may not consider an application until the arrears are cleared | Some lenders may consider it, especially if it is older and the record since is clean |
| Options that may be worth exploring first | Talking to your lender, forbearance, free debt advice | Remortgage, product transfer, staying with your lender |
The lender rows are illustrative only. Each lender sets its own criteria, and the number of missed payments, how recent they were and why they happened all make a difference. Our page on remortgaging with mortgage arrears looks at this in more depth, and remortgaging with missed payments covers late payments on other credit.
Why recency matters
Lenders commonly look at arrears within set periods, such as the last 12, 24 or 36 months. One missed payment 4 years ago, followed by a clean record, is likely to be treated very differently from 3 missed payments in the last 6 months. The more time that passes with payments made on time, the less weight older arrears usually carry.
Can you get a product transfer if you are in arrears?
A product transfer is a new deal with your existing lender. Where you are not borrowing more, FCA rules allow lenders to switch existing customers to a new product without a full affordability assessment (MCOB 11.6.3R). This can matter a great deal if your credit history would make a remortgage elsewhere difficult.
However, a lender can still decide what it offers a customer who is in arrears. Some lenders may offer a product transfer once the account is up to date, or as part of an arrangement to help you. Ask your lender directly what is available. If your current deal is ending, your mortgage will usually move to the lender’s standard variable rate (SVR), which is usually higher, so it helps to ask early.
Talking to your lender about forbearance
If you are struggling, contact your lender as soon as you can, ideally before you miss a payment. Lenders must treat customers in payment difficulty fairly and consider forbearance, which means ways to help you get back on track. Depending on your circumstances, options a lender may consider include:
- a payment arrangement to clear the arrears gradually alongside your normal payments
- a temporary reduction in your payments
- a temporary switch to interest-only payments
- extending the mortgage term to lower your monthly payments
- adding the arrears to the mortgage balance (capitalising the arrears)
Each of these can have costs. Paying less now can mean paying more in total, and changes to your payments may be recorded on your credit file. Ask your lender to explain how any arrangement will be reported and what it means for your balance.
What capitalising arrears means
Capitalising arrears means your lender adds the amount you owe to your mortgage balance. The arrears are cleared, but the loan is bigger. Your monthly payments usually go up slightly to cover the higher balance over the remaining term, and you pay interest on the added amount. For illustration only: £3,000 of arrears capitalised onto a £120,000 mortgage would leave a balance of £123,000.
Lenders often want to see that you can keep up with your normal payments before agreeing to this. It brings the account up to date, but the history of missed payments stays on your credit file. A higher balance also raises your loan to value, which our guide on how LTV affects a bad credit remortgage explains.
The risk of repossession proceedings
If arrears build up and you cannot agree a way forward, your lender may start court action to repossess your home. This is usually a last resort. In England and Wales, lenders are expected to follow a set pre-action process before going to court, which includes trying to agree a repayment plan with you. The law in Scotland is different.
If you receive court papers or a letter about possession, do not ignore it. Free legal advice is available, and GOV.UK explains where to get help with repossession. Getting advice early, well before any hearing, gives you the widest choice of options.
Free debt advice and other help
Free, impartial and confidential debt advice is available from:
- MoneyHelper, the government-backed money guidance service
- StepChange, a debt charity
- National Debtline, a free debt advice service
A debt adviser can help you draw up a budget, treat your mortgage as a priority debt because your home is at risk, and talk to your lender. If you receive certain benefits, you may be able to get Support for Mortgage Interest. It is a loan towards your mortgage interest that has to be repaid, usually when you sell or transfer your home, and it does not cover arrears.
If you are also paying other debts through a plan, see remortgaging with a debt management plan.
Can you remortgage to clear arrears?
Some people look at remortgaging, or taking extra borrowing, to clear arrears or other debts. This may be possible for some people with historic arrears and enough equity, but it is harder with current arrears, and it turns other debts into borrowing secured on your home. A longer term can also mean paying more in total. Our guide to remortgaging to consolidate debt sets out the risks and alternatives, and what adverse credit is explains how lenders view the rest of your credit file.
A remortgage is not always the answer. Staying with your current lender, agreeing an arrangement or getting free debt advice may be better starting points, depending on your situation.
Frequently asked questions
Will a lender consider me if I cleared my arrears 2 years ago?
Some lenders may, particularly if the arrears were limited, your payments have been on time since and you have reasonable equity. Each lender sets its own criteria, and the arrears will still show on your credit file for 6 years from when each missed payment was recorded. See remortgaging with mortgage arrears.
Can I switch to a new deal with my current lender if I am in arrears?
Possibly. Where you are not borrowing more, FCA rules allow lenders to offer existing customers a product transfer without a full affordability assessment. A lender can still decide what it offers someone in arrears, and some may want the account brought up to date first. Ask your lender what options it has for you.
Does capitalising arrears remove them from my credit file?
No. Capitalising adds the arrears to your mortgage balance, so the account is brought up to date, but the record of missed payments stays on your credit file for 6 years from when each one was recorded. Your balance, and usually your monthly payment, will be higher.
Where can I get free help with mortgage arrears?
Free, confidential debt advice is available from MoneyHelper, StepChange and National Debtline. They can help you draw up a budget, treat your mortgage as a priority debt and speak to your lender. Get in touch with your lender as early as you can too, as lenders must treat customers in difficulty fairly and consider options such as a payment arrangement.