How can you stop the repossession of your home? We look at what you need to do if threatened with repossession proceedings.
Of all the reasons to sell a house, repossession is one of the most urgent. In London alone, there were nearly 7,000 repossession claims during 2013 — a number that is expected to increase in future years. In the same year, around 1.75 percent of all home loans in Britain were in arrears. Knowing how to stop repossession of your home will give you more time to get help and address any underlying issues.
If you are in arrears, you run the risk of having your home repossessed by your mortgage lender to settle your debt; a highly stressful situation which can leave you feeling helpless.
Don’t ignore the warnings!
The moment your lender notifies you of an intention to begin repossession proceedings, you must act quickly and decisively. Too many vulnerable homeowners just ignore what is happening and hope the issue will go away. However, this is probably the worst thing you can do in this situation.
By being proactive and approaching your lender, there may be some solutions that are agreeable to everyone concerned. After all, mortgage providers hate repossessions: they are costly, time-consuming and often lead to unpaid debt.
Don’t panic if threatened with repossession
Your mortgage provider cannot just swoop in and turf you out of your home — regardless of how severe your arrears are. A court must hear the case against you. A decision on an application to repossess your home is made according to the bank’s financial arguments and your need for shelter.
The court’s responsibility is to protect the financial interests of the mortgage provider while avoiding a breach of the peace. You will, therefore, get your chance to argue your case before a judge. Of course, things may not go that far if you can reach a mutually agreeable repayment agreement with your lender.
How to stop repossession of your home
The first step is to contact the mortgage provider by phone. You need to act quickly and decisively, and writing will simply take up time you don’t have. Speak to someone who is authorised to reach a repayment plan. However, there are several options open to you at this stage, including:
- Adding the arrears to your mortgage balance
- Requesting a mortgage holiday (if the terms and conditions of your mortgage allow it)
- Cashing in an endowment policy
- Transferring to an interest-only mortgage to reduce your monthly repayments
If these options are not available to you, there might be an opportunity to agree on a payment plan to clear your arrears. However, if you’ve fallen behind in the first place, the chances are you won’t be able to make arrears repayments on top of your usual monthly repayment.
If you’ve exhausted all your options, you may need to consider more drastic actions:
- Rent out your house, and use the rental income to pay your mortgage (and the arrears)
- Take in paying guests
- Sell your house fast
You should call and discuss all your options with the lender. If for instance, you decide to sell your home, the lender may give you more time, therefore, consider all your selling options. However, the lender may choose to decline all of your suggestions, in which case they will give you notification of court proceedings for a house repossession.
Selling your house fast to stop repossession
Selling a property on the open market may not give you the certainty you need. In some areas of the UK, selling property takes an average of six months, from an initial listing to completion. Even if you receive an offer for your property relatively quickly, there are still a wide range of issues that could stall or stop the sale completing.
Fast house buying companies such as Flying Homes make an offer based on the current value of the property. They have the cash and the infrastructure ready to expedite a purchase — and give you certainty regarding price and timescale, possibly what you need to stop repossession by your lender. If the mortgage company will allow you time to sell, then consider all your selling options to maximise the sale price.
What happens if the repossession progresses?
If you can’t satisfy your lender that you can rectify the situation, a suit will be filed in court, asking for an order of repossession. You will receive notification of hearing directly from the court. You will have the opportunity to lodge a defence, but you should seek legal or professional advice before doing so.
The case is going to court. What next?
You will usually need to appear in the court if you wish to lodge a defence. A legal representative will talk you through how to stop repossession of your home in court. One of 3 things may happen as a result of a repossession hearing:
- The judge may postpone or dismiss the case.
- A suspended possession order may be granted, allowing you to stay in your home as long as you stick to certain repayment conditions.
- Your property may be repossessed and sold to clear your debt.
Note: If the sale of your home doesn’t fetch enough money to clear your debt, you will still be liable to pay any outstanding balance.
If the judge orders the repossession of your home, you will have between 28 days and 56 days to vacate the property. The legal costs of your lender will add to the amount you owe. If you don’t move out of your home within the allotted timeframe, court-appointed bailiffs will be sent to evict you forcibly. The bailiff’s costs will add to your debt.
What happens when the lender sells my home?
- You will continue to be charged loan interest on your home loan until the sale of your home is complete.
- If there are surplus monies left over after the repayment of your mortgage and fees, they will refund back to you.
- If the sale of your home does not cover what you owe, you will need to pay this amount back separately.
- Residual debt may pass onto a third party, which means you will owe money to that individual or organisation.
If you need information on how to stop a house repossession in the UK, you should seek advice from a solicitor or a property expert. Your lender has a responsibility to communicate with you throughout the process, so you need to know your legal position from the outset.