Introduction

Our free letter template to dispute liability for a mortgage shortfall is perfect for people who believe time has passed for their lender to recover the money. We draw upon rules and regulator codes to explain why you are no longer liable to pay a mortgage shortfall debt. 

We’ve made a letter template for people with single mortgages, and one for those with a joint mortgage. All you need to do is insert some details about your account and send it off in the post. Once you use our free letter template to dispute mortgage shortfall liability, you shouldn’t hear about the debt again. 

Letter Template

To Whom It May Concern

Regarding Case #: [your case number]* (required)

You have contacted me regarding the above account, which you claim I owe. I do not admit any liability for the debt.

The Limitation Act 1980 Section 20(1) states the following.
“No action shall be brought to recover (a) any principal sum of money secured by a mortgage or other charge on property (whether real or personal);…after the expiration of twelve years from the date on which the right to receive the money accrued”.

Also, UK Finance has agreed that with effect from 11 February 2000, anyone whose property was repossessed and sold and has not been contacted by their lender within six years of the date of sale, will not be asked to pay the shortfall. Whether or not you are a member of UK Finance, this policy is good practice and I urge you to follow it.

I also refer you to the Financial Conduct Authority’s ‘Mortgages and Home Finance: Conduct of Business sourcebook (MCOB)’, which states that if a lender decides to recover a mortgage shortfall debt they must make sure the borrower is informed of this within six years of the date of the sale.

Please confirm in writing that the matter is now closed and that you will not make any further contact with me about the above account.

I look forward to hearing from you.

Yours sincerely


Downloadable Resource

The download links below take you to a Google document template where you can make a copy or save in any document format you like. Note, you may have to login to your Google account.

Download – Single (for one person)
Download – Joint (for couples)

What is a mortgage shortfall?

A mortgage shortfall is the difference in value between the amount left to pay on a mortgage and the value of a property that gets sold. 

After a property is repossessed or given back to a lender due to not keeping up with the mortgage payments, that lender must sell the property to recover the remaining money owed. If they sell it for less than the outstanding mortgage, the difference is the mortgage shortfall, which can be passed back to you as a debt.

Note that the lender must sell the property for the best price available to help you avoid mortgage shortfall debt. 

Can you go to jail for not paying a mortgage? 

If you do not pay your mortgage repayments, you will have your property repossessed but you will not be sent to jail. If you do not pay any mortgage shortfall debt, you also cannot be sent to jail. However, you can be chased for the debt for many years and may have to face bailiffs in the future. 

But there is a way to avoid all of this…

Can you dispute the liability of a mortgage shortfall? 

You can dispute the liability of a mortgage shortfall. The reasons to dispute your liability to pay it back will depend on The Limitations Act 1980, which states how long mortgage providers have to chase debts. If they do not recover the money in a certain period, you are no longer liable to pay the mortgage shortfall debt. 

Reasons to dispute your mortgage shortfall

There are three reasons to dispute liability for a mortgage shortfall debt, which could get you out for paying some or all of the debt. These are:

  1. It has been 12 years since the mortgage shortfall debt and it has not been recovered. There is a time limit of 12 years for mortgage companies to recover the capital of the mortgage shortfall. 
  2. It has been six years since the mortgage shortfall debt has not been recovered. There is a time limit of six years for mortgage companies to recover the interest remaining on a mortgage shortfall.
  3. It has been at least six years (after February 2000 only) since the mortgage provider sold the property and informed you of the mortgage shortfall. Lenders must report the mortgage shortfall within six years or defer their right to collect the debt. 

Use our free letter template to dispute mortgage shortfall debt!

If any of the above rings true about your situation, you should download our free letter template to dispute the liability for a mortgage shortfall debt. It could be the best letter you ever send!

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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