How to stop house repossession

Is it possible to stop house repossession?

If you’re struggling to keep up with your mortgage repayments and are faced with the prospect of losing your home, it’s likely to be a very worrying time. Nobody wants to have their home repossessed, but it may still be possible to stop repossession if you act quickly. This simple guide explains how to stop repossession, no matter what stage of the process you’re at.

How to stop house repossession

What is house repossession?

If you fail to keep up with your mortgage repayments, your mortgage lender can take ownership of your property.  This is known as repossession.

House repossession may occur if you continually fail to make your mortgage repayments. Your home may also be at risk if you fail to repay a loan secured on your property.

What is the house repossession process?

If you’re struggling to keep up with your mortgage repayments, it is important to contact your mortgage lender. You may be able to arrange a new repayment plan or they may be able to move you onto a cheaper mortgage product if one is available. If you do not get in contact with your mortgage provider, you will receive a letter from them asking you to arrange repayment of the outstanding debt. Contacting them before you receive this letter is a good idea. It will demonstrate that you’re being financially responsible and proactively seeking a solution to the outstanding debt.

Before your mortgage lender can begin the legal route to repossession of property, there are certain steps they must follow.  These include:

  • Informing you of how much you owe
  • Considering any requests from you to change the way you pay your mortgage
  • Responding to any payment offer you make, no matter how small
  • Explaining any decision to decline an offer from you within ten days
  • Giving you at least 15 days warning, in writing, if they plan to take you to court

Going to court for house repossession

If you’re unable to repay the outstanding debt and keep up with your ongoing repayments, your lender will begin the legal process of repossessing your property.  

Your lender will send you a letter informing you of a court date for your property repossession hearing.

The letter will contain the following information:

  • The date and time of the court hearing
  • Reasons why the lender is applying to repossess your home
  • A defence form for you to complete and return in time for the hearing

It is important that you complete the defence form. It is your opportunity to explain your situation to the judge. If you are unsure of your defence, you may want to appoint an advisor to help you prepare for the hearing.  An advisor will help gather evidence for the court case and negotiate with the mortgage lender on your behalf. 

Possible outcomes from repossession court case

There are several possible outcomes from your repossession court case:

  1. The judge will decide that your lender can repossess your property
    This means you will have to leave your home. 
  2. The judge will make a suspended possession order.
    You will be able to stay in your home while a repayment plan is put together to clear the debt, but will need to meet strict conditions. If you do not meet the conditions of the order, your home will be repossessed.
  3. The judge will adjourn the case.
    If the judge isn’t satisfied with the evidence on the day, the hearing can be postponed. The extra time will allow both you and the lender to take certain steps before returning to court.

How to stop house repossession

The best way to avoid house repossession is to communicate with your mortgage lender. You should contact them as soon as you find yourself facing financial difficulty. Don’t wait until you are facing arrears that you can’t afford to repay. The earlier you can start working with your mortgage lender to address the problem, the better. Your mortgage lender will only look to repossess your property as a last resort, so it’s important to explore any viable solution.

Can you stop repossession after a court decision?

It may still be possible to stop repossession, even after a court judgement has been made.  It is never too late to negotiate with your lender and agree a strategy to clear the outstanding debt whilst you continue to meet your mortgage repayment obligations. If you feel you are unable to clear the debt, or do not feel confident that you will be able to meet the ongoing repayment obligations due to a change in circumstances, it may be possible to ask for more time so you can sell your property yourself to clear the debt.

There are several benefits to securing a sale yourself if you’re facing eviction. A study by the Joseph Rowntree Foundation found that home repossession has a number of long-lasting negative consequences.  Those who have been through a property repossession will have difficulty securing future lending and also report experiencing a number of emotional and mental health challenges.  Being able to take control of the situation and sell the property yourself will eliminate most, if not all, of the negative impact.

To stop repossession, you will need to offer your lender proof that a sale is in progress.  If you’re struggling to find a buyer on the open market, or you need a quick and guaranteed sale to satisfy your mortgage lender, you may wish to consider selling your property to a professional home buying company, like Quick Move Now. If you’d like to find out how much a direct home buyer would offer, simply complete our free, no obligation estimate form here.

What happens when your house is repossessed UK?

If the judge concludes that you are unable to pay the arrears, you will need to leave the property.

You will usually have 10-14 days to vacate the repossessed property.  If you fail to leave during this period, the lender will apply for permission to evict you.  Permission to evict can take a further few weeks.

How many mortgage payments can you miss before you face repossession?

Your mortgage lender should only consider house repossessions as a last resort. With this in mind, most lenders will not consider starting repossession proceedings until you have missed at least 3 mortgage payments and have been referred for independent debt advice.

How long does it take to repossess a property?

If the courts grant an outright repossession order, they will give you a date for possession of the property to be transferred to your mortgage lender. This date will usually be 28 days after the court date.

Alternatively, the court may grant a suspended possession order. A suspended possession will set out a payment plan. As long as you make the required payments, the suspended possession order will allow you to stay in your home. If you fail to make the scheduled payments, the order will give your mortgage lender the power to repossess your property.

What happens to your house after you’ve been evicted?

Repossessed houses will be resold by the mortgage lender. They will usually put your house on the market as soon as it is vacant. The mortgage lender has a responsibility to get the highest possible price for your property and will seek independent expert advice, however many will choose to sell repossessed properties at auction.

What happens to your mortgage after your home is repossessed?

The proceeds from the house sale will be used to clear your outstanding debt. Any surplus left after the mortgage has been repaid will be given to you. If the proceeds from the sale are not enough to cover the amount you owe, you will be responsible for the outstanding ‘shortfall debt’. You will need to make arrangements with the mortgage lender to repay the outstanding debt. This debt will usually continue to accrue interest.

Other reasons for house repossession UK

Although missed mortgage payments are the leading cause of home repossession, there are a number of other circumstances that can prompt lenders to take action. 

Bankruptcy

If you fall into financial difficulty and accrue a number of debts, you may not be able to pay everything you owe. Declaring bankruptcy may be the only way forward. If you are declared bankrupt, you can use your assets to pay back your creditors over a set period, after which point your debts will be written off.

As your home is often your largest asset, it may be repossessed so any equity can be used to pay off debt.  

Defaulting on a secured loan

There are two types of loan, secured and unsecured. When you take out a secured loan, you have to ‘secure’ it against an asset that will act as a guarantee. If you fail to keep up with your loan repayments, the lender can repossess the asset you have secured the loan against to clear the outstanding debt. In many cases, this asset with be your home.  

If you’re struggling to keep up with secured loan repayments, you should speak to your lender and discuss repayment options. This should help to delay any legal action they may be considering taking against you.

Compulsory purchase order

While less common, a compulsory purchase order (CPO) can also result in home repossession. A compulsory purchase order is a legal process that allows certain bodies to purchase your land or property without your consent. They will do this if they need the land for development and it is considered to be of significant benefit to the public, eg. a new motorway.  

If your home is repossessed with a CPO, you will be compensated financially. You can challenge a CPO in court if you don’t agree with it. It will be the organisation’s responsibility to demonstrate that there is a strong case in the public interest to reclaim the land your house sits on.

Breaching the terms of a lease

Properties in the UK are either freehold or leasehold. When you purchase a freehold property, you own both the building and the land itself. If you buy a leasehold, you are purchasing the rights to live in the property for the duration of the lease. The lease will have terms and conditions, especially pertaining to the payment of things like ground rent and service fees. If you fail to pay these charges, the owner could bring the lease to an end and consequently repossess the property.

How many houses are repossessed in the UK?

According to the Ministry of Justice and Office of National Statistics, house repossessions are on the rise again after several years of relative stability.

In 2009, home repossession levels reached a 14-year high.  Easy credit availability and the creation of 125% home loans led to many homeowners borrowing at higher levels than before. When the financial bubble burst and higher interest rates kicked in, thousands of homeowners found themselves in severe financial difficulty. Since then, lenders have tightened up their lending criteria in a bid to stabilise the economy and UK property market.

In the lead up to 2020, we saw a steady reduction in repossessions. Figures then dropped off completely due to the government’s ban of repossessions during the pandemic. However, since then, rising interest rates and a ‘cost of living’ crisis have contributed to the figures rising once again.

Between April and June 2023, there were 3,986 repossession claims – an increase of 15% on the same period the previous year.

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Author:

Danny Luke

Danny Luke

As Managing Director, Danny is responsible for the overall performance of Quick Move Now and provides strategic guidance and direction to all its employees. Danny is committed to making Quick Move Now the leading and most trusted home buying company in the UK.
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