How To Stop House Repossession

Stop Your Property Being Repossessed

You can stop house repossession if you act fast and follow some simple rules.

Many of us will experience financial difficulty at some point in our lives. If you have lost your job or incurred unexpected costs, you may fall behind on your mortgage repayments.  This can result in your home being repossessed.

Having your home repossessed can be a traumatic experience with long-term consequences.

A study by the Joseph Rowntree Foundation found that home repossession can have a significant impact on a number of different areas of your life. In addition to having difficulty securing any future borrowing, people who have experienced home repossession report experiencing a sense of loss, a feeling of personal failure, loss of confidence, reduced self-esteem, relationship breakdown, stress and depression.

How many houses are repossessed?

Rates of home repossession are decreasing across the UK. The Council of Mortgage Lenders reports that repossession orders are at their lowest rate on record since 1982.

Home repossessions reached a 14 year high in 2009. This sharp increase was a result of easy credit availability and the creation of 125% loans. Thousands of homeowners got into financial trouble when the bubble burst and higher rates kicked in.  This fed into the national economic crisis that saw some of the UK’s largest banks facing bankruptcy. Since then, lenders have been forced to tighten up their lending criteria in a bid to stabilise the economy and UK property market.

While rates may currently be down, many experts predict the UK will see an uplift in house repossessions. This is primarily due to the expected increase to the Bank of England’s interest rate. This anticipated rise will immediately affect homeowners who are on a variable rate mortgage, while those who are fixed will feel the effects when their term ends.

House-Repossession-graph-over-time

 

What happens when your home is repossessed?

Your lender will write to you about your mortgage arrears.

If you fall behind on your mortgage repayments, your lender will contact you in writing to arrange payment of the outstanding debt. You may not be in a position to clear the debt in full, in which case you have the opportunity to negotiate a repayment plan with your mortgage lender.  If you are able to do this it will avoid any further action being taken.

Your mortgage lender must get a court order to repossess your home

If you fail to keep up with your repayment plan, your lender will apply for a court order to repossess your house. This application is made through the local county court.  The court order will only be granted if the lender can set out reasons why a judge should give them possession of the property.

You will receive a letter from the court advising you of the court hearing to repossess your home

The court will fix a date for the hearing, where a judge will decide whether your home will be repossessed. Contents of the court hearing letter will include:

  • 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 you complete the defence form as this is your opportunity to explain your situation to the judge. If you are unsure on your defence, you may want to get an advisor to help you prepare for the hearing. Your advisor will be able to help gather evidence and negotiate with the mortgage lender on your behalf.

There are several possible outcomes from the hearing:

The judge will decide your home should be repossessed.

This will lead to you being evicted from your home. The mortgage lender will sell your property to clear the outstanding debt.

The judge will make a suspended possession order.

This will allow you to stay in your home while a repayment plan is in action to clear the debt. There will be strict conditions with this order that must be met.  If you do not meet the conditions your home will be repossessed.

The judge will adjourn the case.

If the judge isn’t satisfied with the evidence on the day, he will postpone the court hearing for a later date.  This extra time will allow the lender and homeowner to take certain steps before coming back to court.

What happens if the judge decides my house should be repossessed?

If it is agreed at the court hearing that you can’t make up the arrears, you will usually be given 10 – 14 days to voluntarily vacate the property. If you don’t do this, the lender will apply for permission to evict you. Permission to evict you can take an additional few weeks. Even at this late stage, it is still possible to halt eviction proceedings. You can do this in two ways; clear the outstanding debt or show the court that you have a buyer for the property. If you can’t do either of these things, an eviction notice will be served and you will be forced to vacate the property.

What happens to my home after I have been evicted?

Your mortgage lender will sell your former home in order to clear any outstanding debts. Mortgage lenders have a duty to raise as much as possible for the sale of your property.

To reduce time, repossessed houses are sold at auction. After the sale, the lender will recover their costs.

It is important to note that properties rarely achieve their full market value at auction and you will be liable for any negative equity if the money from the sale does not cover your debt. You will be required to pay back any outstanding debt that has not been recovered from the sale of the property, even though you are no longer living there.

If you have equity in the property when it sells, you will receive it after the sale (minus the costs incurred by the mortgage lender throughout the repossession/resale process).

If you manage to secure a quick, cash sale for your home before repossession, you can avoid these extra charges and retain any equity held within the property.

Stop house repossession – what are your rights?

Before your mortgage lender can repossess your property, they must:

  • Inform you of how much you owe
  • Consider any requests from you to change the way you pay your mortgage
  • Respond to any payment offer you make, no matter how small
  • Explain any decision to decline an offer from you within 10 days
  • Give you at least 15 days warning, in writing, if they plan to take you to court

Other reasons for house repossession

Although getting into arrears through missed mortgage payments is the leading cause of home repossession, there are a number of other things that can prompt lenders to take action.

These are some of the leading causes of repossession and how they can be avoided:

Mortgage Arrears

If you fail to keep up with your mortgage payments, it is known as falling into arrears and is grounds for the mortgage lender to repossess your home. After one missed payment, the lender will send warnings in written correspondence, and if the debt is not repaid they are able to start proceedings. Once the property is back in their possession, they are able to sell it to recoup their losses.

You’ve been declared bankrupt

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

As your home is often your largest asset, the money from your home can be used to pay off a substantial amount. While bankruptcy may provide some financial relief in the short term, it’s important to note that it will have a big impact over the long term, permanently marking your credit history and making it difficult for you to obtain any credit (a credit card, loan, mortgage or consumer financing) in the future.

Defaulted on a secured loan

There are two types of loan, secured and unsecured. When you take out a secured loan, you’ll have to “secure” it against an asset that will act as a guarantee you’ll pay back the loan. If you fail to keep up with your loan repayments, the lender can then repossess the asset you have secured to cover the outstanding debt. In most cases, this asset with be your home. If you are struggling to keep up with your repayments on a secured loan, it’s worth speaking to your lender sooner rather than later to discuss options and prevent any legal action being taken against you.

You’ve been handed a compulsory purchase order

While less common, a compulsory purchase order (CPO) can also result in home repossession. A compulsory purchase order is when a local council or governing makes a bid to buy your home, as it is on land that is required for another project.

For example, if your home is on a piece of land on which they want to build a motorway or new development, a CPO may be issued. If your home is repossessed with a CPO, you will be compensated financially. A CPO can be challenged in court, during which time the body in question will have to demonstrate that there is a “compelling case in the public interest” of reclaiming 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 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 applicable. If you fail to pay these charges, the owner could bring the lease to an end and consequently repossess the property.

How to avoid repossession of your home?

If you are struggling to meet your mortgage payments or have encountered any kind of financial difficulty, notifying your lender as soon as possible is the most important thing to do. You may be able to arrange a different repayment plan while you get your financial affairs in order.

If you aren’t in a position to pay off arrears and a court order is made against you, you can still stop your house from being repossessed by quickly selling your home. You will need to act fast. Selling on the open market would not be a viable option to stop your house being repossessed.

How to stop house repossession with Quick Move Now

If you want to avoid the repossession of your home, you could choose to sell your home quickly to a professional cash home buyer. Even if you have received an eviction notice, it’s not too late to stop proceedings.

Quick Move Now, the UK’s largest cash home buyer specialises in the quick sale of houses under threat of repossession.

Some people come to us as soon as they start to struggle with their mortgage payments, while others may be facing imminent repossession.  Because we are a genuine cash buying company, we can buy your home in as little as seven days – sometimes even sooner – allowing you to stop court proceedings.

Particularly in cases involving a potentially repossessed property, time is of the essence. We offer you an instant decision over the phone and can arrange for a fast valuation of your property.

When selling on the open market, you may encounter delays for a number of reasons.  Market conditions, location and property marketing can all have a big impact on how long it takes to sell. When selling a home fast to Quick Move Now, you can avoid all of this. Our process has been designed to be as simple and stress-free as possible. We’ll even pay expenses such as your solicitors’ fees to help with a quick, hassle-free transaction.

What’s more, Quick Move Now buys houses discreetly to save you any discomfort or embarrassment. If you are worried about the repossession of your home, selling your home directly to us can help.

Simply call us today on 0800 068 3366, and speak to one of our friendly property purchasers to find out whether we can buy your home and stop your house repossession.

This content was written by Quick Move Now
Published on 2nd July 2016
Last updated on 8th May 2019