Mortgage arrears charges

If you don’t keep up with your monthly mortgage payments, your lender may apply charges for being behind – also called being “in arrears”. The charges are meant to cover the lender’s costs of managing the account while it is in arrears.

If you’re unhappy about being charged arrears fees, it might be because:

• you’re having money problems and think your lender isn’t treating you fairly
• you think arrears fees, legal costs or fees for home visits aren’t fair, or are too high
• you think the fees have been wrongly charged

You might also be worried that the lender is going to repossess your home, or that they’re harassing you about the arrears.

It’s important you talk to your mortgage lender as soon as you have difficulties meeting payments. That way, you have the chance to agree an approach that works for you both. And it can avoid a bad situation getting worse.

Your lender needs to work with you constructively. If you can’t reach an agreement then you can make a formal complaint to them. After that, if you’re still unhappy, you can get in touch with us – we’re here to help.

Find out more about how to complain.

You may also find the Money Advice Service website useful if you want to contact one of the independent free charities that can help people in financial difficulty.

Lenders are meant to treat you fairly if you’re struggling financially. 

We’ll check that they’ve:

• responded fairly and constructively – as soon as you tell them you’re behind with your payments
• listened to you and taken your individual circumstances into account
• listened to any realistic plans you have to get the mortgage back on track

Here are some of things we’re likely to look at to help us decide if a charge is fair:

• whether your financial situation is likely to improve – so if you’ve fallen ill, that you’ll be able to return to work
• whether you and the lender have been open and available to each other – and tried to work out a fair and reasonable solution
• any payments you made to the account while it was in arrears (and how big the payments were)
• whether your lender carried out any additional work in the months that charges were applied (and if so, what this was)
• if the lender had told someone else to recover the debt, that it can show it’s not charging twice for the same work

We might decide it’s fair for your lender to put in place a reduced payment plan or a repayment holiday. Or to allow you to pay only the interest on their mortgage for a certain period of time.

If we decide you’ve been charged unfairly, we may ask your lender to refund part or all of the charges.

We might also suggest that your lender pays you compensation for distress and inconvenience they’ve caused you.

The Money Advice Service has more information about mortgage arrears on its website.