How to stop the repossession of your home
Owning your own home is expensive. If your financial situation has changed you may be struggling to pay your mortgage. This is known as mortgage arrears and even one missed payment can result in legal action being taken against you.
Up until the 1st April 2021 the FCA had put in place a moratorium on the enforcement of lender repossession. This was established as the pandemic had a huge impact on people’s earnings, with many people being out of working or losing their jobs. More people than ever contact their lender for a mortgage holiday, hoping the respite would enable them to get back on track with their mortgage repayments.
Due to the passing of the Coronavirus Act in March 2020 repossession levels are at an unprecedented low. However, with the suspension now over, it is expected that levels will rise again.
If you’re behind on your mortgage payments, for whatever reason, you could face repossession if your mortgage lender triggers the process. Below we outline how to tackle mortgage arrears and how to stop repossession.
What is repossession?
If you fall behind on your mortgage repayments your mortgage provider will contact you. They will inform you that you are in mortgage arrears and how much money you owe them. You are a customer of your lender and honest communication about your financial situation will help them determine the best course of action for you. The last thing your provider wants is to start repossession proceedings so they will likely try and find a solution. This could be:
- A mortgage holiday so you can get your finances together and then begin repayments
- Allow you a time period to borrow money from family and friends and repay the sum owed
- Fixing your outstanding balance to future mortgage repayment deadlines
Your mortgage provider will endeavour to find an alternative payment plan that you can meet so that you do not lose your home. The best thing you can do as a homeowner is have open communication with your lender and be completely honest. There is no point agreeing to a repayment structure that you cannot meet.
Discover how a short sale can be a viable alternative to avoid house repossession, allowing you to sell your home and avoid the credit damage associated with foreclosure.
What happens when your home is repossessed?
If you fail to liaise with your lender, or fail to meet the agreed repayment schedule, they will be forced to file for a repossession order. This means the courts have decided that the mortgage company can repossess your home.
You will be invited to attend court. You will explain your case to the judge. Fortunately, solutions are often put together even at this stage of repossession proceedings because neither the courts nor your lender want you to lose your home.
However, there are some circumstances which cannot be rectified. In these cases, the judge may state that repossession is the best option. If this is decided the judge will provide you with the date you must leave your property. If you are still present when this date arrives bailiffs will attend your home to remove you and your belongings. Your mortgage provider will then sell your home and, once mortgage arrears and legal fees have been deducted, any remaining money will be returned to you.
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Ways to stop repossession
If you fall behind on your mortgage payments get in touch with your lender immediately. Waiting for them to contact you is not a smart move. Open and honest communication is key. More often than not, your mortgage provider will give you advice and help you find a solution. However, there are other ways to avoid repossession too.
When liaising with your mortgage provider try and bring a budget, plan, or lump sum payment to the table. Having a grasp on your finances will prove to your lender that you are keen to rectify the situation and fulfil your responsibility.
With this information they may suggest:
- Switching you to an interest-only mortgage
- Adding your arrears to future mortgage payments
- Granting you a mortgage holiday
If you would like to clear your arrears, rather than selecting a solution above, you may need to consider:
- Moving out and letting your home
- Subletting a room in your house to a lodge
Do you have a mortgage insurance policy?
Many people choose to take out insurance policies on their mortgage. After all, who can predict what will happen during the time it takes you to pay off your lender? If you took a mortgage protection insurance policy for added peace of mind when you purchased your home, you should get in touch with your provider. It is not guaranteed that your policy will cover your situation. However, many offer mortgage protection relating to loss of life, illness, or a drop in income. It is an avenue worth pursuing to stop repossession.
Get in touch with a financial expert
Trained advisers are available for free via Shelter or the Citizens Advice Bureau. These bodies can provide impartial legal and financial advice and can help you find the support you need if you’re facing repossession. The Debt Advice Foundation, StepChange and PayPlan also offer advice over the phone and have resources online to help you find a way out of mortgage arrears.
Voluntarily sell your home
Whilst it can be upsetting, selling your home rather than it being repossessed is a potential final solution if you have run out of options. Selling up can help you avoid going to court and having a black mark against your name financially in the future. This means you will be able to buy a property further down the line without your credit rating being affected by a repossession.
SmoothSale can help you sell your home fast to avoid repossession. We are trusted cash house buyers. This means we have the cash available to buy your property directly from you. We are able to facilitate a quick house sale for you, meaning we can stop repossession of your home. SmoothSale can buy your house from you today and our friendly team of experts will guide you through the process, taking the stress away by facilitating a free and fast sale of your home.
Get a free no obligation cash offer from SmoothSale today and find out how we can help you avoid repossession.