Mortgage Arrears vs Mortgage Capital: Different Limitation Periods Explained

When a mortgage borrower falls behind on payments or a property is sold at a loss, the resulting debt does not necessarily remain enforceable forever. UK law sets time limits — known as limitation periods (or prescription periods in Scotland) — after which a lender can no longer use the courts to recover what is owed.

Crucially, the law treats mortgage capital (the principal sum borrowed) and mortgage interest arrears as separate categories, each with its own time limit. These periods differ depending on which part of the United Kingdom the mortgage falls under: England and Wales, Scotland, or Northern Ireland.

This guide explains how those limitation and prescription periods work, what the key legal thresholds are, and where the rules differ across UK jurisdictions. It does not cover what action any individual should take, nor does it address whether any particular debt is or is not enforceable in a specific case.

There is no single limitation period for mortgage debt. The time limit depends on what type of debt is being pursued and which UK jurisdiction applies.

In England, Wales, and Northern Ireland, a lender has 12 years to bring a court action to recover mortgage capital and 6 years to recover mortgage interest arrears. In Scotland, the equivalent periods are 20 years for mortgage capital and 5 years for mortgage interest. These periods generally begin from the point at which the lender's right to recover the money first arose.

Once a limitation period has expired without court proceedings being issued, the debt becomes statute-barred. In England, Wales, and Northern Ireland, this means the debt still exists but can no longer be enforced through the courts. In Scotland, the debt is extinguished entirely — it legally ceases to exist.

The limitation system operates through separate pieces of legislation in each UK jurisdiction. The core principle across all three is the same: if a lender does not commence court proceedings to recover a mortgage debt within a specified number of years, the right to do so expires.

England and Wales

The governing legislation is the Limitation Act 1980. Section 20(1) provides that no action may be brought to recover any principal sum of money secured by a mortgage after the expiration of 12 years from the date on which the right to receive the money accrued. Section 20(5) provides that no action to recover arrears of interest payable in respect of any sum of money secured by a mortgage may be brought after the expiration of 6 years from the date on which the interest became due.

After these periods expire, the debt remains legally existent but is unenforceable through court action.

Scotland

The governing legislation is the Prescription and Limitation (Scotland) Act 1973. Under Section 7, the prescription period for mortgage capital is 20 years. Under Section 6 and Schedule 1, paragraph 1(a)(i), the prescription period for mortgage interest is 5 years.

A critical distinction in Scots law is that once the prescription period expires, the debt is extinguished. It does not merely become unenforceable — it ceases to exist as a legal obligation.

Since 28 February 2025, following commencement of amendments made by the Prescription (Scotland) Act 2018, the 20-year negative prescription period operates as an absolute long-stop and cannot be interrupted, unless a claim was already live before that date.

Northern Ireland

The governing legislation is the Limitation (Northern Ireland) Order 1989. Article 36 sets a 12-year limitation period for principal money secured by a charge on land or personal property. Article 37 sets a 6-year limitation period for arrears of interest payable under a mortgage. The structure closely mirrors England and Wales, though it operates under separate Northern Ireland legislation.

After these periods expire, the debt remains legally existent but is unenforceable through court action.

Limitation and Prescription Periods at a Glance

Mortgage capital (principal):

• England and Wales: 12 years (Limitation Act 1980, Section 20(1))
• Northern Ireland: 12 years (Limitation (Northern Ireland) Order 1989, Article 36)
• Scotland: 20 years (Prescription and Limitation (Scotland) Act 1973, Section 7)

Mortgage interest arrears:

• England and Wales: 6 years (Limitation Act 1980, Section 20(5))
• Northern Ireland: 6 years (Limitation (Northern Ireland) Order 1989, Article 37)
• Scotland: 5 years (Prescription and Limitation (Scotland) Act 1973, Section 6 and Schedule 1)

When the Clock Starts

The limitation period begins when the lender's "right to receive the money accrued" for capital, or when the "interest became due" for interest arrears. In most cases, the right to receive capital accrues after a specified number of missed payments or another default event as defined in the mortgage deed. The exact trigger point varies between mortgage contracts — it may be after two or three missed payments, but this depends on the specific terms of the individual mortgage deed and cannot be stated as a fixed rule.

For interest, each individual interest payment has its own separate limitation period running from the date on which that specific payment became due.

What Restarts the Clock

In England, Wales, and Northern Ireland, a written acknowledgment of the debt or a part payment can restart the limitation period. Under the Limitation Act 1980, Sections 29 and 30, the acknowledgment must be in writing and signed by the person making it. Payment of interest may restart the limitation period for capital where it constitutes a payment in respect of the secured debt.

In Scotland, a "relevant acknowledgment" can interrupt the prescriptive period for the 5-year interest period. However, since 28 February 2025, following commencement of amendments made by the Prescription (Scotland) Act 2018, acknowledgment or a relevant claim can no longer interrupt the 20-year long-stop period for mortgage capital, unless a claim was already live before that date.

Once a debt has become statute-barred or prescribed, a subsequent acknowledgment or payment cannot revive it. Under Section 29(7) of the Limitation Act 1980, the debt cannot be brought back to life once the limitation period has fully expired.

FCA Notification Requirements

The Financial Conduct Authority imposes a separate regulatory requirement on mortgage lenders regarding shortfall debts (debts remaining after a property has been sold). Under MCOB 13.6.4R, lenders must notify borrowers of their intention to recover a shortfall within 6 years of the date of sale in England, Wales, and Northern Ireland, or within 5 years of the date of sale in Scotland. This requirement applies to regulated mortgage contracts and does not apply to unregulated lending. This is a conduct requirement that operates independently from the statutory limitation periods. It does not extinguish the debt or prevent court action in itself. FCA guidance at MCOB 13.6.5G also clarifies that a firm is not required to recover a sale shortfall.

FCA Rules on Statute-Barred Debts

Under CONC 7.15.4R, a firm must not attempt to recover a statute-barred debt in England, Wales, or Northern Ireland once it knows or ought reasonably to know that the limitation period has expired and the lender has not been in contact with the customer during the limitation period. Under CONC 7.15.8R, a firm must not continue to demand payment from a customer after the customer has stated that they will not be paying the debt because it is statute-barred.

Effect of Issuing Court Proceedings

If court proceedings are issued before the limitation period expires, the time limit ceases to run. Once a judgment is obtained, limitation periods no longer apply to the enforcement of that judgment.

"Limitation" vs "Prescription"

These terms describe broadly similar concepts but arise from different legal traditions. England, Wales, and Northern Ireland use "limitation periods," where the debt survives but becomes unenforceable. Scotland uses "prescription periods," where the debt is extinguished entirely. The practical difference is significant: in Scotland, the obligation itself ceases to exist once the period expires.

Separate Categories

Capital and interest are treated separately. Many people assume there is a single time limit for "mortgage debt." In fact, the law draws a clear line between the principal sum and interest arrears, and each has a different limitation period. Furthermore, each individual interest payment carries its own limitation period running from the date it fell due. However, once capital becomes statute-barred, any associated claim for interest also fails because it is ancillary to an unenforceable principal obligation.

FCA vs Statute

The FCA notification rule is not a limitation period. The FCA's requirement for lenders to notify borrowers within 6 years (or 5 years in Scotland) of a property sale is a regulatory conduct rule, not a statutory limitation period. It operates separately from the Limitation Act 1980 or its equivalents.

Restarting Rules

Restarting the clock is possible — but only before the period expires. Written acknowledgment or part payment can restart the limitation period, but only while the debt is still within its limitation window. Once the period has fully expired and the debt is statute-barred, no subsequent acknowledgment or payment can revive it.

Trigger Points

The start date depends on the mortgage contract. The point at which the limitation period begins running is not a fixed calendar date set by law. It depends on the specific terms of the individual mortgage deed, which typically define when the lender becomes entitled to demand full repayment. In most cases, this is triggered by a specified number of missed payments, but the exact number varies.

Fraud or Concealment

Across all UK jurisdictions, the limitation period does not run during any period in which the creditor was prevented from making a claim due to fraud or concealment by the debtor. In England and Wales, under Section 32 of the Limitation Act 1980, the period does not begin until the fraud or concealment is discovered or could, with reasonable diligence, have been discovered. In Scotland, under Section 6(4) of the Prescription and Limitation (Scotland) Act 1973, time during which fraud or error induced by the debtor persists is not reckoned as part of the prescriptive period.

Lender in Possession of Personal Property

Under Section 20(2) of the Limitation Act 1980, where a mortgagee (lender) is in possession of mortgaged personal property, the right to foreclose is treated as not having accrued until possession discontinues. This exception applies specifically to mortgaged personal property, not land, and is rare in modern residential lending.

Prior Mortgagee in Possession

Under Section 20(6) of the Limitation Act 1980, where a prior mortgagee has been in possession of the property, a subsequent incumbrancer may recover arrears of interest that fell due during the prior possession period, provided the action is brought within one year of the discontinuance of that possession. This is an exception to the standard 6-year interest limitation rule and applies in England and Wales.

Proceedings Already Issued

If court proceedings have been issued before the limitation period expires, the time limit ceases to run. Limitation periods do not apply to the enforcement of any judgment subsequently obtained. This applies across all UK jurisdictions.

The existence of separate limitation periods for mortgage capital and mortgage interest means that the enforceability of different parts of a mortgage debt can expire at different times. A lender may, for example, still be within the 12-year window for capital recovery while the 6-year period for certain interest arrears has already passed.

Because each interest payment has its own limitation period, arrears that accrued at different times will become statute-barred at different points. However, once capital itself becomes statute-barred, all associated interest claims also fail because they are ancillary to an unenforceable principal obligation.

The Scottish system produces a different outcome from that in England, Wales, and Northern Ireland. In Scotland, once the prescription period expires, the debt no longer exists in law. In England, Wales, and Northern Ireland, the debt continues to exist — it simply cannot be enforced through the courts. This distinction may matter in situations where a debt is recorded on credit files or where a creditor attempts to recover the debt through non-court means.

The FCA's conduct rules add a further regulatory layer. Even where a debt remains within its statutory limitation period, the FCA requires lenders to have notified the borrower of their intention to pursue a shortfall within the specified timeframe. The FCA also prohibits firms from attempting to recover statute-barred debts where there has been no contact with the customer during the limitation period.

Written acknowledgment or part payment can reset the limitation clock, but only while the original period is still running. Once the debt has become statute-barred, no further action by the borrower can revive it.

• Separate Periods: UK law sets separate limitation periods for mortgage capital and mortgage interest arrears, and these differ by jurisdiction.
• England, Wales, NI: Limitation period is 12 years for capital and 6 years for interest.
• Scotland: Prescription period is 20 years for capital and 5 years for interest.
• Legal Effect: In England, Wales, and NI, a statute-barred debt still exists but cannot be enforced. In Scotland, it is extinguished entirely.
• Start Date: The period begins from the date the lender's right to recover the money first arose, which depends on the specific terms of the mortgage deed.
• Restarting: Written acknowledgment or part payment can restart the limitation period while it is running. Once expired, it cannot be revived.
• Scottish Reform: Since 28 February 2025, the 20-year capital prescription period in Scotland is an absolute long-stop and cannot be interrupted.
• FCA Rules: The FCA imposes separate conduct rules regarding notification and statute-barred debts.
• Interest vs Capital: Once capital becomes statute-barred, associated interest claims also fail.
• Fraud: Fraud or concealment can pause the limitation period.