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Dealing with your mortgage lender

This advice applies to Scotland

This information applies to Scotland only

Dealing with your mortgage lender

It is essential that you contact your lender about your mortgage arrears. As soon as you have worked out how you are going to handle your mortgage payments and the arrears you need to negotiate about your proposal with the lender. You must work out your financial situation either yourself or with a specialist money adviser. If you haven’t already done this see How to sort out your mortgage problems.

If you have worked out your financial situation and you cannot afford your current mortgage check if there are options to cut your mortgage costs.

See Cutting down your monthly mortgage costs.

If you have mortgage arrears your mortgage lender has a legal responsibility to make reasonable efforts to negotiate with you to find an alternative to repossession. The lender must take certain steps called pre-action requirements before taking you to court.

If you would like more information about what your lender’s obligations are and what steps it can take you can visit the joint Scottish Legal Aid Board and Shelter Scotland website at

If you took out your mortgage from 31 October 2004 onwards, your mortgage lender has to follow the Financial Conduct Authority (FCA) rules when dealing with mortgage arrears.

The rules say that your mortgage lender must treat you fairly and give you a reasonable chance to make arrangements to pay off the arrears, if you are able to. It must consider any reasonable request from you to change when or how you pay your mortgage. If your mortgage was taken out before October 2004 a lender has to abide by the code that existed then.

If your mortgage lender doesn't follow these rules, you can complain to the Financial Ombudsman Service.

You might negotiate with your lender using the following process:

  • find out who to contact
  • explain what has happened so far
  • make the offer
  • suggest a review period
  • make a complaint if you are unhappy about a decision.

Who to contact

If it is not clear who is dealing with the arrears from any correspondence you have received, you should telephone the nearest branch office for your lender and ask for the name and address of the person dealing with your mortgage account.

Different lenders deal with the administration of arrears in different ways, for example, through:

  • branches or district offices
  • mortgage control centres
  • service or payment centres
  • regional or head offices
  • lenders' litigation departments or solicitors.

Explain what has happened

Once you have the appropriate official to talk to about the arrears and ongoing mortgage payments you should explain what has happened. You can indicate on the telephone that you intend to write to the lender setting out a proposal as well as explaining why there is a problem. You might find it helpful to use an experienced money adviser for this. You can get money advice from your local Citizens Advice Bureau - where to get advice.

Try to persuade your mortgage lender that accepting an offer is in both of your interests. The costs of legal action to repossess a property can be high therefore accepting your offer would save these costs.

Your letter should also include the following information:

  • the background to the problem
  • the reason(s) why the arrears have built up
  • that you previously had a good payment record, if this is appropriate
  • whether there is any equity in the property. Having equity means that your property is worth more than you currently owe on the mortgage or other loans
  • if you can raise some money from a Mortgage Payment Protection insurance policy.

Make the lender a detailed offer

Once you have worked out a way of dealing with your mortgage arrears it is important that you put a detailed proposal to the lender rather than just ask it to offer you a solution. This is because a lender may not be fully aware of your circumstances or of the range of options available for dealing with your financial problems.

Write a letter to your mortgage lender, clearly setting out your offer for payment. Your offer should be one which you can realistically keep to, and which will clear the arrears within the period of the mortgage. The offer should be based on how much you can afford to pay. There is no point in offering a figure that you can’t keep to because if you break the agreement the lender may take legal action to repossess your property.

Include a financial statement with your letter which shows your mortgage lender how you have worked this out. If you are not confident that you have prepared the statement clearly go to an experienced adviser who can help you to do this.

Don’t forget to take all the paperwork that the adviser might need to understand your financial position and the offer you want to make.

You can get debt advice from your local Citizens Advice Bureau - where to get advice.

If the person you are dealing with at the mortgage company is not being helpful, it's worth trying to deal with someone who has more responsibility, for example, a supervisor or an arrears manager.

Review period

You could suggest to your lender that it accepts your offer for a certain period of time, after which it can review the situation to see how well it has been working. This gives you a period of time to show that you can keep to the arrangements you have suggested. It is really important that you can make a realistic offer.

What to do if your lender doesn’t accept the offer

If your lender doesn’t accept the offer you should start to make regular payments, however small, as it may help your case if it takes legal action later on. You will be able to demonstrate to the court that you have kept to a commitment to pay what you can towards the arrears.

If you are not happy with the way your lender deals with your case, you can make a complaint. Find out about your lender’s internal complaints procedure first. If this doesn’t work, you can complain to the Financial Ombudsman Service. For more information about this service, visit

When your lender is a local authority you might find it helpful to talk to your local councillor. If you are unhappy about how the local authority has handled your case, after you have followed its complaints procedure you can complain to the Scottish Public Services Ombudsman.

See How to use an ombudsman or commissioner in Scotland.

If you haven't been able to agree with your mortgage lender on how to pay off your arrears, it will probably take you to court to try to get possession of your property. When legal action is being taken against you, you must seek advice from an experienced adviser but remember that it is never too late to try to reach an agreement with your lender.

See Lender is taking legal action for repossession and eviction.

You might be able to get help from a special scheme

See Schemes to provide support to homeowners in danger of losing their homes.

Although you may think it would be worthwhile to sell your property or hand back the keys to the lender you should be aware that this course of action does not always solve the problems of mortgage arrears.

See Selling the property or handing back the keys.

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