Updated August 2023
Every month, hundreds of homes in the UK are repossessed. It’s a sobering statistic, but with the right knowledge, you can stop house repossession. This guide will show you the way to avoid repossession yourself.
In order to help homeowners through this puzzle, we’ve put together the 7-step house repossession process. This should give the average person stuck in a repossession an idea of where they are currently and prepare them for what’s to come.
House repossession is a legal process where a bank or mortgage lender, or a third-party authority takes ownership of a property due to the homeowner’s inability to keep up with their mortgage payments. It’s a last resort action taken when all other avenues to recover the debt have been exhausted.
The process of house repossession begins when a homeowner defaults on their mortgage payments (see the image above for more details).
The lender, typically a bank or building society, will initially contact the homeowner to discuss certain circumstances regarding the missed payments and explore possible solutions. If these discussions fail to resolve the issue and the arrears continue to accumulate, the lender may decide to initiate legal proceedings to repossess the house.
The legal aspects of repossession are governed by strict rules, legal processes and regulations. In the UK, a lender must follow the Pre-Action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears in Respect of Residential Property. This protocol outlines the steps a lender must take before applying to court for a possession order. These steps include providing the homeowner with clear information about the amount of arrears, discussing why the arrears have occurred, and considering any proposal by the homeowner to pay off the arrears.
If the lender decides to proceed with repossession, they must apply to the court for a possession order. The court will then schedule a hearing where both the lender and the homeowner can present their case. If the court grants the possession order, the homeowner will be given a date by which they must leave the property. If they fail to do so, the lender can request a warrant for possession, and bailiffs can be used to evict the homeowner.
Home repossessions can take place for several reasons. It’s not uncommon to find that a home becomes repossessed property because the owners are going through a divorce, and nobody wants to foot the mortgage bill. Regardless of the reasons, if you fall behind in mortgage payments and add to your list of arrears, it’s important to take action immediately. The two most important things to remember at this point are:
According to Statista, hundreds of homes in the UK are repossessed every month – An alarmingly high figure to say the least.
From the chart and statistics provided above, we can see that property repossessions are quite a regular occurrence here in England, making it all the more important for those going through a repo to educate themselves on how they can put a stop to it.
During a repossession, homeowners have 101 questions going through their heads, including things like, can I stop a house repossession? What happens to my debt after my home is repossessed, and what can I do if my home is being repossessed? All the answers to these questions can be found easily if a person puts in the time and effort to learn about them. Additionally, you can find all the answers to these questions and more throughout this article.
Mortgage arrears occur when you miss one or more payments on your mortgage. They are a serious matter because they can lead to house or repossession and court proceedings if not addressed promptly. When you fall into arrears, your lender will contact you to discuss repayment. If you ignore these communications, the lender may start legal proceedings to repossess your house.
Managing mortgage arrears effectively is crucial to stop house repossession. Here are some steps you can take:
Remember, the sooner you address your mortgage arrears, the more options you will have to stop house and repossession proceedings.
It’s also worth noting that mortgage arrears can impact your credit score, making it more difficult to secure loans or credit in the future. Therefore, it’s in your best interest to seek advice and address financial problems and these arrears as soon as possible. If you’re experiencing financial difficulties, there are several charities and organisations that offer free advice and can help you understand your options. These include the Money Advice Service, National Debtline, and StepChange Debt Charity. By taking proactive steps and seeking help early, you can prevent your mortgage arrears from escalating into a repossession.
Now that we know what the repossession process involves, let’s look at some things you, as a homeowner, can do to stop repossession of your home.
Let’s look at these 8 ways that can potentially put a stop to repossession in a little more detail.
If you find yourself in this position, you must talk to an expert or professional. They can give you the correct advice on how to proceed & outline all your options.
Professionals such as debt advisors, solicitors, and housing counsellors have the knowledge and experience to guide you through this challenging time. They can provide sound advice, tailored to your specific personal circumstances and help you devise a plan to manage your arrears and negotiate with your lender.
Many organisations offer free advice services, so you can seek legal advice and don’t have to worry about the cost of legal fees. These include the Citizens Advice Bureau, the National Debtline, and Shelter. They can provide you with impartial advice, legal aid and support to help you navigate the repossession process.
If you fall behind on your monthly payments, you should first contact your mortgage lender and get advice from them. Do not put it off or they could repossess your home quicker. The earlier you do it, the better your chances of sorting things out and keeping your home.
There is a range of options your lender can offer you, some of which include:
Talk to them and see what they can do.
Most mortgages are, at the very least, a little flexible regarding repayments, allowing you to pay off extra in advance. So if you find yourself in this position & can pay off extra at any point, you should take it up.
You cannot predict the future & if things get tough for you later and financial difficulties start to mount, at the very least, you will be able to pay a reduced first mortgage payment or even take a payment holiday.
One of the worst things you can do is to keep your head down and hope everything will sort out itself – it won’t.
Double-check which benefits you are entitled to & claim them all. Do not miss out on any benefits, as they could be the difference in ensuring you keep your home. Remember that it’s not only unemployed people who can claim them.
Mortgage payment protection insurance could also help you meet your mortgage repayments for a year or two and allow you to get back on your feet.
Do not just hand your keys over & assume everything will be fine after that. Get professional advice before proceeding, as you will still be responsible for paying your mortgage.
If you do, your mortgage debt will increase, and your name will appear on the mortgage repossessions register, making it extremely difficult to get a mortgage in future.
Instead, at this point, you should consider your house-selling options such as an estate agent or house buying company. You can get more money for your house by selling it as an ‘occupied home’ instead of the lender selling it as unoccupied at the auction house.
If there is still money owed even after the sale of the property, lenders can chase you for up to 12 years for the rest of the cash. However, an informal agreement between Council of Mortgage Lenders members means they will not usually pursue you after 6 years. This being said, there have been cases where, even after 6 years, lenders are still chasing people for their money, so keep this in mind.
If you’re facing repossession and find yourself in this position and have been ordered to attend a repossession order hearing, be sure to attend.
Even at this stage, there is still a chance for you to keep your home. Present your case to the judge as best you can.
Payday loans may seem attractive but are very risky. Their sky-high interest rates can make a bad situation a lot worse & the longer you do not pay them back, the more your outstanding debt increases.
Do not take this payment plan as an option unless you are 100% positive you can pay back the cash on time.
Sell to let is when you sell your house and then rent it back. By opting for one of these schemes, you will no longer own your home & there is still a chance that you can be evicted if you fall behind with any rental payments.
If your lender allows it, you could consider renting out your property or a part of it. The rental income could help you meet your monthly mortgage payments too. However, becoming a landlord comes with its own responsibilities, costs involved and challenges, so it’s important to consider this option carefully.
In this comprehensive guide, we’ve explored the sobering reality of house repossession and the steps you can take to stop it. It’s important to remember that house repossession is a legal process that lenders resort to when all other avenues to recover the debt have been exhausted. Understanding this process and the legal aspects involved is crucial. If you find yourself facing this situation, don’t ignore it. Seek professional advice, contact your lender, and explore all possible options.
These may include selling your house, renting it out, or negotiating with your lender. Dealing with mortgage arrears is a key part of this process, and managing them effectively can prevent repossession proceedings. Remember, the sooner you address your mortgage arrears, the more options you will have to stop house repossession.
House repossession is not just a financial issue, but also an emotional one:
Remember, the goal is not just to stop house repossession but also to secure a stable financial future.
We guarantee to buy any house in any condition within 7-14 days, irrespective of your financial situation, so if you’re struggling with arrears and face repossession of your home, don’t delay – get in touch with us immediately.