- 1 House Repossession: Here’s Everything You Need to Know
- 2 Stop House Repossession Now – Follow the Steps to Stop Repossession Immediately
- 3 What is Voluntary House Repossession?
- 4 What happens when the lender repossesses your house?
- 5 How many months arrears before the house is repossessed?
- 6 Why should I sell my house to Stop Repossession?
- 7 If my house is repossessed, do I get any money back?
- 8 What is Repossession Shortfall Debt?
- 9 Can I get a mortgage after repossession?
- 10 TIC Finance- We Specialise in Stoppping Repossessions
House Repossession: Here’s Everything You Need to Know
A frightening fact recently reported by the UK’s Money Charity organisation is that each day, lenders repossess 15 properties in the country. Sadly, many end up losing their homes because they didn’t know that they had other options or didn’t understand the legal steps required for repossession. Even if you can’t pay all your bills, often times there are ways that you could still keep your home. Anyone struggling to settle their arrears should start by reading this complete introductory guide to sorting out what happens in house repossession and what you can do about it.
What is House Repossession?
To understand how house repossession works, remember one very important fact:
If you took out a mortgage to buy your home, then you don’t actually own it until you’ve paid off the mortgage completely.
A mortgage is a loan that has the ownership of your property as its collateral. Your lender is essentially making you prove your right to ownership of the house by giving you a fixed amount of time, usually about 25 years, to finish paying for it.
When you start falling behind on payments and can’t continue to make them any longer, then the lender reclaims the home. They can legally evict you for breaking the terms of your mortgage contract; this is repossession. All lenders have this privilege for as long as your mortgage exists.
That means no one is safe from the threat of repossession until they’ve paid for their home in full, which ends the mortgage contract.
Once the lender takes back your home, they sell it to recover their losses. If they sell the property for less than your mortgage balance, you will still have to pay the difference even after you’ve moved out. Worse still, you’ll also owe large repossession fees to the lender on top of the remaining mortgage balance.
For these reasons, it’s advisable to do everything you can to avoid repossession and sell your home on your own when you can longer afford it.
House Repossession Process – Step-by-step Explanation
- After you miss your first monthly mortgage payment, the bank or lending agency will contact you. They might increase your interest rate or impose some other penalty for your payment delay.
- After you miss two monthly payments, the financing agency will start sending you more letters and warnings about the possible consequences of your delayed payments. If you don’t contact them, then they are more likely to initiate the filing for repossession of your home sooner. If you do contact them and try to start negotiations, then you can often buy yourself another month or so to try and clear your arrears.
- The law requires the agency to notify you when they are starting repossession proceedings. At this point, your lender applies to the local court and explains why they want the judge to grant them a repossession of your property.
- Your local courthouse will set a date for your hearing. On this day, the judge will decide if you can stay in your home or not. The court will mail you a copy of your lender’s claims against you. They will include the time and day of your hearing and give you a defence form.
- At this point, you’re must complete the defence form and send your reply to the court. You’ll need to get legal advice to prepare for the court hearing and gather your evidence. If you want to settle the case out of court, you may be able to make a negotiation with your lender’s solicitor in some circumstances now.
House Repossession Laws
When you attend your court hearing, the judge will listen to all the evidence and resolve your case in one of four ways. These are the key laws you should know:
- The judge may rule in favour of your lender and give permission for repossession. Then your lender could evict you if you don’t leave the property by the date that the judge decides. In most cases, you have to leave within 28 to 56 days. They will sell your home to settle your mortgage debts.
- Alternatively, the judge may give a suspended possession order so that you can remain at home as long as you adhere to the judge’s conditions. Sometimes the judge may let you stay in the home long enough to sell your property, or you can keep your home if you make additional payments. Keep in mind that if you break any of these conditions, then your lender can evict you.
- If the case is complex, the judge may adjourn your case. That gives both you and your lending agency more time to work out certain steps before the judge reviews your case again.
- If the lender is acting against the law, you could get lucky and receive a dismissal of your case.
During repossession cases, don’t lose your head in fear too quickly. The law can frequently turn out in your favour because your creditor must follow the particular steps listed below in this order. If they don’t, you can file for more time to process the case. Furthermore, always show all of the paperwork and emails you receive from your creditor to a legal adviser or a charitable legal agency before you take action.
- The lending agency must tell you exactly how much you owe and how many additional charges or interest they’ll add to your arrears.
- They must discuss with you or someone who can legally act on your behalf the exact reasons for all these charges. They must also enquire about your current financial situation and talk about different options you have for repaying what you owe.
- Legally, the bank or lender must at least consider any reasonable requests you make to move your payment date.
- Once you break your payment agreement, they must give you a final-warning notice before they start repossession proceedings.
- If the lender wins the case and gets a repossession order from the judge, then they can evict you if you don’t leave the property by the designated date. To do so, however, they need to apply to the local court again to get a bailiff’s warrant. They can’t just send anyone to your house to remove you without a warrant.
- If they get a warrant, bailiffs will write to alert you ahead of time about when they’re coming to repossess your home. Bailiffs must behave professionally and cannot resort to any physical violence when they arrive. If you still don’t leave when the bailiffs come, they can call the police to remove you.
- Your lending agency must try to get the highest price possible when they sell a repossessed home. If they sell a property at a shady auction or by some other practice that unnecessarily lowers the selling price of the property, then you can take action. Contact the Financial Services Ombudsman when the lender is unjustly behaving in a way that forces you deeper into debt.
Stop House Repossession Now – Follow the Steps to Stop Repossession Immediately
Contact your Lender to Buy More Time
After you receive the first notification from your creditor asking you to sort out your arrears, it’s in your best interest to start a dialogue with them. Take some time to look at all your options. Very few situations are actually hopeless, so don’t assume the worst. Get some legal advice and make your own proposal about how to handle the debt. This step will buy you much-needed time to make backup plans and consider selling your property if need be.
The creditor must answer your new payment proposal. In the best-case scenario, they may even accept a new payment schedule or lower your interest rates. In the worst-case scenario, they’ll warn you that they’re ready to start the repossession proceedings. Even when they give you this warning, you can still negotiate with them to buy more time. The law requires them to respond positively to your negotiation attempts, so you have nothing to lose by trying.
At the very least, you’ll gain more time to deal with your financial problems, which could make a huge difference in your future.
Contact an Adviser
While you often get the best legal support from a paid solicitor, you may not be in a position to get such help. In that case, you can still get sound legal advice on repossession issues for free from these government agencies and non-profit organisations:
- Civil Legal Advice can counsel those who qualify for free legal aid who live in England or Wales. Call them at 0345-3454-345.
- The housing charity known as “Shelter” has a free national helpline you can call at 0808-800-4444.
- The UK’s Department for Communities and Local Government has made sure that everyone can access free legal representation for their repossession hearing in most major county courts. For more than half of hearings where free representation is present for the homeowner, they avoid immediate repossession. Contact your local county court to enquire about this option.
Contact a Finance Company to Get Repossession Loans
An effective way to halt repossession proceedings is settle your mortgage arrears with a bridging loan, or repossession loan, from another finance company like TIC Finance.
At that point, your debt will transfer from your current lending company to the new one, and your former lending agency will drop all repossession proceedings. This way out only works for some people who may have a history of good credit and a reliable plan to settle their debt in the near future.
Nevertheless, it’s very likely nowadays that a bridging loan would be a temporary solution, and you’d still have to sell your home in the end. Bridging loans could save you money on repossession fees, but bridging-loan lenders often require you to sell your house to guarantee that you can repay the loan.
For more sources of financial support, try these two options:
- Find out if you qualify for financial support by contacting the bureau of Citizens Advice. If you can claim support for mortgage interest, then it will help relieve some of your debt.
- Also check if your insurance plan has unemployment insurance. This coverage is frequently included in sickness or accident insurance, and making a claim with your insurance company will help you cover your mortgage payments.
Other Ways to Stop Repossession Order
Even if the judge rules to repossess your home, you can ask a legal adviser if you have the options to file for a new order to stay in your home. Some cases allow you to suspend a possession order or appeal the decisions to a higher court. Also, it’s never too late to make new financial agreements with your lending company. Even from the day the court issues a repossession order up until the day of eviction, you can still continue to make negotiations with your creditor about easier ways to settle your arrears.
The Government Offers Another Last-resort Choice
The Mortgage Rescue Scheme set up by the UK government in 2008 to help struggling homeowners get financial support to pay their mortgage is another option to avoid repossession. The intention of this government fund is to give assistance to those with no other living options who face eviction, and it allows people to sell their homes to an association and pay a reduced rent to remain on the property.
However, England residents can no longer apply for this benefit. Only those living in Scotland are currently eligible for the Mortgage Rescue Scheme, and they can seek further advice from Shelter.
What is Voluntary House Repossession?
What do you do if your debts are overwhelming, you see no possible way out and you’re prepared to file for bankruptcy? It might seem like the easy way out to just relinquish your keys, but it’s not always the best choice for everyone.
If you owe less than £20,000, it could be a good idea to ask a free legal adviser about filing for a debt-relief order. You may qualify for it if the agencies decide that you have no legitimate way to pay your debts, no assets, a very low income and no other prospects to improve your financial situation. You would lose your home, but you’ll get a chance to start over financially.
Declaring bankruptcy is generally a bad idea for most people, so always seek legal advice first. In bankruptcy, your accounts become frozen. You’ll lose any valuable or nonessential assets you have, including your home. Plus, it’s harder to get a job in some fields or good credit in the future with a history of bankruptcy. The only advantage is that bankruptcy allows you to clear your debts, but your life becomes very restricted. Besides that, just filing for bankruptcy alone costs hundreds of pounds. Few people are exempt from the bankruptcy filing fee.
Find out more on the UK government’s website about current bankruptcy laws and homeowner rights. The laws vary depending on if you live in England, Scotland, Wales or Northern Ireland.
What happens when the lender repossesses your house?
As mentioned earlier, you have three choices. First, you could fight the repossession order in court to buy yourself more time or keep your house. Secondly, you can continue to re-negotiate new mortgage-payment terms on your own with your lender, and if they agree to new terms, they’ll drop the warrant of repossession so that you can stay in your home. If all else fails, you must move out by the date specified by the judge on the repossession order. If you don’t move out, the lender will file for an eviction warrant to remove you.
After you leave and the lender sells your home, you must pay back any balance of arrears you owe to the lender.
How many months arrears before the house is repossessed?
On average, lending companies might even wait two months before contacting you about your delayed mortgage payments. It is usually after six months of missed payments before the majority of UK bank lenders will begin the repossession proceedings. Once they’ve filed for repossession, you may have to wait two months before going to your court hearing. You’ll get a notice that your repossession proceedings have begun at least two weeks before your court hearing at the latest. Then if the judge grants repossession to your lender, you’ll generally have one to two months to leave your property.
Why should I sell my house to Stop Repossession?
It’s highly advisable to sell your house to stop the lender from taking ownership. This is because if the lender sells the house, you may get a lesser value at an auction, you will pay estate agents’ costs, you will be required to pay legal costs, and even worse, you will be required to continue paying until the house is sold.
If my house is repossessed, do I get any money back?
Your mortgage company have the legal duty to sell it at the best possible price. As soon as they repossess it, your house will be put up for sale in the market.
The lender will use the sale proceeds to repay the debt, only if the money is enough. If property is sold at a price lower than the mortgage debt, then you have a shortfall debt that you must pay the mortgage lender. On the other hand, if the sale results to a surplus, then it’s returned to you. Typically, that’s the only money you should expect back.
You pay for all legal costs and estate agent costs. You are also liable to continue paying the mortgage until the sale goes through which might take many months. All these expenses are taken from the surplus amount the mortgage company owes you after their money is paid.
It is therefore recommended that you sell your property yourself.
What is Repossession Shortfall Debt?
If your property is sold at a price that is not enough to cover the mortgage debt, the lender will still claim the remaining debt. This debt is commonly referred to as “shortfall debt”. The lender will notify you immediately if your property sells at a price that is below your mortgage .
To receive these statements at your current place or residence, the lender may require you to provide your home address.
Can I get a mortgage after repossession?
Yes, but it’s highly advisable to apply with a mortgage specialist and to wait as long as possible before applying. If you apply for another mortgage within a year of your repossession, you’ll almost certainly face rejection. However, applying from three to six years or more after the repossession greatly increases your chances of getting a good mortgage contract with a decent rate. Also, the banking group of the lender who repossessed your home is likely to never grant you a mortgage again. That’s why you need to do some research and apply to lenders from new banking groups, preferably with a mortgage adviser for a better chance of success.
TIC Finance- We Specialise in Stoppping Repossessions
We are the people to call when faced with house repossession. We specialise in stopping repossessions by buying off your property instantly or lending you money to repay the mortgage debt.
We will provide you with a quote within 1 working hour and have the funds deposited into your account in as little as 48 hours.
You can rely on us to provide you with fast, quality, and exceptional customer assistance.
Even if you have exhausted all financial options open to help you repay your mortgage debt, it’s still possible to stop repossession. Hopefully, this information will help you stop your mortgage lender from taking ownership of your house.