If you’re a homeowner with an outstanding mortgage, you’ll know how vital it is to keep up with your mortgage repayments.
If you don’t, your lender is entitled to repossess your home. But what happens if you’re actually facing this situation? And what can you do to avoid things getting this far? We answer all your questions about repossession in today’s blog.
It’s always a last resort
We really can’t stress this enough: repossession is always a last resort. Your lender doesn’t want to evict you and will only take this step if there really is no other option – in fact, there are rules in place that mean lenders must attempt every other option available to them before they take you to court.
For this reason, let’s first look at how you can avoid being on the wrong end of a repossession order.
Keep up with your repayments
The first and most obvious way to avoid your home being repossessed is to make your monthly mortgage payments in full and on time. If you do this for the duration of your mortgage, you have no need to worry about repossession.
However, we understand that things are rarely that simple – you wouldn’t be reading this blog if they were.
Prioritise your mortgage
Are you struggling to pay your mortgage because your other financial commitments are causing you to fall behind? If you are, did you know that your mortgage is always seen as a priority? If you have other lenders chasing you for money, perhaps to clear an outstanding credit card balance or pay back a personal loan, you should still pay your mortgage first and then see what you have left over to put towards your other payments.
If problem debts are causing you to miss your mortgage repayments, get help as soon as possible. You can get free and impartial advice from the Money Advice Service.
Speak to your lender
As well as seeking financial advice when you fall behind with your mortgage, you also need to speak to your lender. It’s important they’re made aware of your situation; ideally as soon as you realise you’re going to miss a payment.
The thing is, your lender doesn’t want to take your home away from you. As soon as they see you’ve stopped paying your mortgage, they will attempt to contact you so you can work out a way to make up your arrears.
But you don’t have to wait for them to get in touch – you can contact them first. And your lender has a legal responsibility to consider any suggestion you make.
Tell your mortgage lender you’re finding it hard to keep up with your repayments, along with the reason for this. They should help you to come up with an alternative arrangement. For example, they might agree to reduce your repayments to make them more affordable. It will take you longer to clear your mortgage and you may end up spending more on interest overall, but your home will be safe.
Tip: If you have Mortgage Protection Insurance, this can help cover your mortgage repayments if you’ve been in an accident, are sick or have been made redundant.
If legal action is taken
If you’ve gone a number of months into arrears (usually when you’re at least six months behind, if not more) and you haven’t managed to come to a new arrangement with your lender, leading them to launch legal proceedings against you, it’s important you’re aware of your rights. As we said, you should seek professional support and advice straight away. You should also check whether you’re entitled to legal aid.
Your lender first has to get permission from the court to go ahead with repossessing your home. A court date will then be fixed and you’ll be informed of this. If you are in the process of selling the property to raise money to repay your mortgage, you can ask your lender to delay this action, but you’ll need to keep them informed of the offers you receive.
However, if you’re not selling your home you will need to fill out the defence form you’re sent by the court. You can speak to an advisor about how to fill this out, but make sure you return it on time.
Once all forms have been returned, a judge will consider the arguments and circumstances of both you and your lender and make a decision on whether the repossession should go ahead. The possible outcomes include:
- The repossession goes ahead and your lender has the right to evict you
- A suspended possession order is passed and you can remain in your home. There will be certain conditions, which may include a new payment plan
If the judge decides to grant your lender permission to go ahead with the repossession, you will be evicted. If you don’t leave, the court can send Bailiffs over to remove you and your possessions. You can find out about Bailiffs’ rights when they visit your home here.
While your home is on the market, you will still be responsible for making repayments on your mortgage until it has sold. When it does, you will receive the money that’s left once the lender has reclaimed what it’s owed. However, if the sale price is not enough to cover what you owe your lender, you will remain in debt to them.
Help is available
All of this can sound extremely scary. However, repossession really is a last resort and there’s plenty of advice and support available to help you avoid it.