When mortgage payments become difficult to manage, the outstanding balance can become a serious concern. You may already be struggling to afford your normal monthly instalments, yet interest and other charges can make it harder to reduce the amount you owe.

This often leads borrowers to ask an important question: can a mortgage lender freeze interest on mortgage arrears, or must the interest continue to accumulate until the arrears are cleared?

The answer depends on the circumstances, the type of mortgage and the terms of any arrangement with the lender. A borrower cannot automatically demand an interest freeze in every case, but interest relief is an option that may need to be considered where the relevant regulatory rules apply.

The Financial Conduct Authority (FCA) has rules requiring regulated mortgage lenders to treat customers with payment difficulties fairly. Those rules include considering whether it is appropriate to reduce the interest rate, defer capital or interest payments, or apply simple rather than compound interest.

This does not mean every request must be accepted. It does mean that borrowers experiencing financial difficulties should not assume that interest relief is impossible.

What Does Freezing Interest on Mortgage Arrears Mean?

Freezing interest generally means stopping further interest from accumulating for an agreed period or under specified conditions. However, the expression can mean different things depending on what the lender is offering.

For example, a lender might agree to reduce the interest rate, defer interest payments temporarily or apply a different method of calculating interest. In some circumstances, it may consider suspending or waiving further interest or certain charges.

These arrangements are not necessarily identical. Deferring interest payments does not always mean that the interest is cancelled. The amount may still become payable later, depending on the agreement.

Similarly, reducing the interest rate may slow the growth of the debt without stopping interest altogether.

Before accepting an arrangement, ask the lender to explain exactly what will happen to the interest, whether the balance will continue to increase and whether any deferred amounts will have to be repaid later.

What Do FCA Rules Say About Interest on Mortgage Arrears?

The FCA’s Mortgage Conduct of Business rules, particularly MCOB 13, address how regulated mortgage lenders should deal with customers who have, or may have, payment difficulties.

Under MCOB 13.3.4A, lenders must consider whether certain options are appropriate in light of the customer’s individual circumstances. These options include:

• Extending the mortgage term.
• Changing the type of mortgage.
• Waiving or deferring capital or interest payments.
• Reducing the interest rate or applying simple interest instead of compound interest.
• Treating a payment shortfall as part of the original amount borrowed, where appropriate and subject to the applicable rules.

The lender must also provide adequate information about the implications of a proposed arrangement, including its potential effect on the overall balance and credit-file reporting.

You can read the relevant provisions in the FCA Handbook: MCOB 13 — Payment Difficulties and Repossessions.

These rules are important, but they should not be misunderstood. They do not give every borrower an unconditional right to have mortgage interest frozen. The lender must consider the individual circumstances and whether a particular option is appropriate.

The type of mortgage also matters. The specific MCOB provisions discussed here concern regulated mortgage contracts and home purchase plans within their scope. Buy-to-let and other lending arrangements may be subject to different rules, depending on the product and circumstances.

When Might a Lender Consider Freezing or Reducing Interest?

A lender may consider interest relief when a borrower is experiencing financial difficulty and the existing debt is becoming increasingly difficult to manage.

For example, a borrower may have lost employment, experienced a significant reduction in income or developed a long-term financial problem. They might be able to make only small payments towards the mortgage, meaning that the outstanding balance continues to increase.

In such circumstances, continuing to add interest and charges may make it harder to resolve the arrears. Depending on the applicable rules and the borrower’s circumstances, reducing, suspending or waiving further interest or charges may be worth considering.

The FCA’s rules and guidance on arrears management also address forbearance and the treatment of customers in financial difficulty. In relevant circumstances, the rules may require a lender to reduce, waive or cancel further interest or charges to the extent necessary to prevent the debt from increasing during a repayment arrangement that the customer is meeting.

This is not a blanket interest-free guarantee for everyone in arrears. The precise requirements depend on the applicable rules and the circumstances of the arrangement.

The relevant provisions can be found in the FCA Handbook: CONC 7.3 — Treatment of Customers in or Approaching Arrears.

Does a Mortgage Lender Have to Freeze Interest If You Cannot Afford the Payments?

Not automatically. Financial difficulty alone does not mean that every borrower qualifies for a complete interest freeze.

The lender may consider your income, essential expenditure, the amount of arrears, the history of the account, your ability to maintain an arrangement and the likely outcome of different options.

It may decide that another solution is more appropriate, such as a temporary reduction in payments, a change to the mortgage term or an arrangement to clear the arrears over time.

However, where the relevant FCA rules apply, the lender should consider your individual circumstances rather than treating every case in exactly the same way.

If you have requested interest relief and received a refusal, ask the lender to explain its decision and whether it considered other suitable forms of support. If you believe your circumstances have not been properly considered, you can raise a formal complaint.

How Can Interest and Charges Make Mortgage Arrears Worse?

When a borrower misses a mortgage payment, the unpaid amount becomes a payment shortfall. If the borrower continues to miss payments, the total arrears can increase.

Interest on the outstanding mortgage balance may continue to accrue under the mortgage agreement. Depending on the circumstances and the applicable terms, charges may also be added.

This can create a difficult situation: the borrower is already unable to meet the contractual payments, but the total amount owed continues to grow.

Consider a borrower who has fallen behind after losing part of their income. They can afford their normal mortgage payment but have very little left to repay the arrears. If the lender requires a large additional payment each month, the proposal may be unaffordable. If interest and charges continue to increase the debt, clearing the arrears may become even more difficult.

This is why it is important to examine the complete position rather than focusing only on the original missed payments.

Ask the lender for an up-to-date statement showing the arrears, payments received, interest and charges applied, and the outstanding mortgage balance. If anything appears incorrect, request a breakdown and raise the issue with the lender.

Can You Ask Your Mortgage Lender to Stop Adding Interest?

Yes. You can ask your lender to consider freezing, reducing, waiving or deferring interest where your circumstances justify the request. Whether the lender can or must agree depends on the applicable rules, the mortgage terms and your individual situation.

Your request will be more useful if you explain why the arrears have developed and what you can realistically afford.

Start by preparing a household budget showing your income, essential living costs, other debt commitments and the amount available for your mortgage. Explain whether the financial difficulty is temporary or likely to continue.

You can then ask the lender to consider a suitable arrangement, including whether interest or charges can be reduced or suspended while you maintain agreed payments.

Avoid promising more than you can afford. An arrangement that looks generous on paper but fails after a few months may not resolve the underlying problem.

Ask the lender to confirm its decision in writing, including the duration of any interest relief, the way interest will be calculated and what will happen when the arrangement ends.

What If the Lender Refuses to Freeze Interest?

If the lender refuses your request, you should not assume that you have no further options.

First, ask for the reasons behind the decision. Establish whether the lender considered your financial circumstances, the affordability of your proposal and other available forms of support.

You may be able to submit further evidence, revise your repayment proposal or ask the lender to consider a different arrangement.

If you believe the lender has not followed the applicable rules or has handled your case unfairly, you can use its formal complaints procedure. Explain what you asked for, what the lender decided and why you believe the decision or the handling of your account was inappropriate.

If the lender issues a final response that you disagree with, or does not resolve the complaint within the applicable timeframe, you may be able to refer the matter to the Financial Ombudsman Service. Eligibility and referral deadlines depend on the circumstances, so check the relevant guidance.

The Financial Ombudsman Service considers certain complaints about mortgage financial difficulties, including arrears, charges and lenders refusing requests for support. Its guidance is available at Financial Ombudsman Service: Financial Difficulties with Mortgages.

A complaint does not automatically stop repossession proceedings or require the lender to freeze interest. If court proceedings have started, respond to the relevant documents and seek appropriate advice about the court process as well.

Can Freezing Interest Help You Avoid Mortgage Repossession?

Interest relief may help some borrowers manage their arrears, but it does not automatically prevent repossession.

The important question is whether the proposed arrangement offers a realistic route towards resolving the payment difficulties and maintaining the mortgage over the longer term.

For example, reducing further interest may help prevent the debt from growing as quickly. However, if the borrower cannot afford the normal monthly instalments, interest relief alone may not be enough.

A more comprehensive arrangement might need to address both the ongoing mortgage payments and the existing arrears. Depending on the circumstances, the lender may consider changes to the mortgage, an affordable repayment plan or other forms of support.

For regulated residential mortgages within the relevant rules, repossession should not be treated as the first response where reasonable alternatives remain available. However, the rules do not mean that repossession can never take place.

If you are concerned about losing your property, our guide explains the process: Mortgage Repossession Process in the UK: What Happens From Start to Finish.

Is Freezing Interest the Same as Writing Off Mortgage Arrears?

No. These are different arrangements.

Freezing or reducing interest concerns the interest that may be charged in the future, or the way interest is treated under an agreed arrangement. It does not automatically remove the arrears already owed.

Writing off arrears means that the lender agrees to cancel some or all of an amount that would otherwise be payable. This is a separate issue and is not guaranteed simply because the borrower is in financial difficulty.

A lender may consider different forms of support depending on the circumstances, but borrowers should not assume that an interest freeze will cancel the existing debt.

For more information, read our guide: Can Mortgage Arrears Be Written Off in the UK?.

If your lender has proposed adding arrears to the mortgage balance instead, our article Can Mortgage Arrears Be Added to Your Mortgage Balance in the UK? explains what capitalisation means and why it may affect the overall cost of borrowing.

What Should You Do If Your Mortgage Arrears Keep Increasing?

If the amount you owe is continuing to rise, take action as soon as possible.

Contact your lender and request a clear statement of the arrears, interest and charges. Explain your financial circumstances and ask it to consider the available options, including whether interest relief may be appropriate.

Prepare a realistic budget before proposing a repayment arrangement. If you cannot afford the full monthly payment, explain what you can afford and whether your circumstances are likely to improve.

Keep copies of correspondence, payment records and any agreement reached with the lender. If the lender accepts an arrangement, make sure you understand the conditions and what you must do to keep it in place.

You should also consider free, independent debt advice if you are struggling to manage several financial commitments. MoneyHelper provides guidance on help with mortgage payments.

If you are already discussing a temporary payment break, remember that it is not necessarily the same as an interest freeze. Our guide, Can You Get a Mortgage Arrears Repayment Holiday in the UK?, explains the distinction and the alternatives that may be available.

Final Thoughts: Can a Mortgage Lender Freeze Interest on Arrears?

A mortgage lender may be able to freeze, reduce, waive or defer interest in appropriate circumstances. For regulated mortgages, FCA rules require lenders to consider relevant options in light of the customer’s individual circumstances. In certain repayment arrangements, specific rules also address reducing or waiving further interest and charges so that the debt does not increase during the arrangement.

However, there is no universal guarantee that a lender will agree to a complete interest freeze. The outcome depends on the applicable rules, the type of mortgage, the terms of the arrangement and the borrower’s circumstances.

If your mortgage arrears are growing, request a detailed account statement, explain your financial position and ask the lender to consider appropriate support. If you believe your request has been handled unfairly, consider using the lender’s complaints procedure and seeking independent advice.

Taking action early may give you more opportunity to explore a sustainable solution before the situation becomes more difficult.

How Immediate Bank Claims May Help

Immediate Bank Claims provides independent support, guidance and assistance to property owners experiencing mortgage arrears, repossession concerns, LPA receiver issues and related property or debt difficulties. Understanding the available options and preparing clear information about your circumstances can help you identify the questions to raise with your lender.

For further information, visit Immediate Bank Claims.

Disclaimer: Immediate Bank Claims is not a firm of solicitors or barristers; it provides independent support, guidance and assistance relating to property repossession, mortgage arrears, LPA receivers, debt matters and related issues. The content of this article is provided for general information only and does not constitute legal or financial advice. Individual circumstances vary, and appropriate professional advice should be obtained where required.