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, which can result in your home being repossessed.
Having your home repossessed can be a traumatic experience with long-term consequences. In addition to the financial consequences you would expect (long-term debt, difficulty applying for future credit and financial insecurity)
A study by the Joseph Rowntree Foundation found that house repossession can also have a significant impact on the social aspects of your life. People they interviewed, who had all experienced losing their homes to repossession, found that most reported experiencing things like the sense of loss or personal failure leading to loss of confidence, self-esteem, relationship breakdowns, depression and stress.
The top five reasons that lead to house repossession
Rates of home repossession are decreasing across the UK, with the Council of Mortgage Lenders reporting 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 the days of easy credit and 125% loans, which saw thousands get into financial trouble after their fixed-rate mortgages ended and the high variable rates kicked in. This fed into the overall economic crisis that saw some of the UK’s largest banks facing bankruptcy until the state bailed them out. Since then, the Bank of England have dropped their base rate to just 0.25% and 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 as we enter 2018. 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.
While rates may be down, the fundamental reasons that lead to home repossession remain unchanged. Mortgage arrears are the leading cause of house repossessions. Homeowners facing repossession can expect the following process to take place before they are evicted from their homes:
What is the mortgage lenders process that leads to a house being 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. If you aren’t in a position to clear the arrears in full, you have the opportunity to negotiate a repayment plan with your mortgage lender to avoid any further action being taken. Your lender will write to you after this initial contact to reaffirm your conversation and warm you of the likely consequences of house repossession if you don’t stick to your agreement.
- 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 and will only be granted if the lender can set out reasons why a judge should give them possession of the property.
- 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. You receive a letter from the court advising you of the court hearing to repossess your home
The court fixes a date for the hearing, where a judge will decide if you can keep your home or if the lender should get repossession based on the information presented. Contents of the court hearing letter include;
- The judge will decide your home should be repossessed.
This will lead to you being evicted from your home and 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 outstanding debt. There will be strict conditions with this order that must be met, otherwise 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, allowing the lender and homeowner to take certain steps before coming back to court.
- The judge may decide to dismiss the case against you. The repossession court hearing
On the day of your court hearing, a judge will hear the evidence from your mortgage lender for repossession along with your defence before making a decision. There are a few possible outcomes;
- Eviction Notice
If it is agreed at the court hearing that you can’t make up the arrears, you are given approximately 10 – 14 days to voluntarily vacate the property. If you don’t do this, the lender will apply for permission to evict you, which can take an additional few weeks. Even at this late stage, it is still possible to halt eviction proceedings. You really have two options; you can either clear the outstanding debt and start making regular payments again or, you can show the court that you have a buyer for the property. If you can’t de either of these things, an eviction notice will be served and you will be forced to vacate the property.
- Your lender will write to you about your mortgage arrears.
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 through property auction houses, where full market value is very rarely achieved. After the sale, the lender will recover their costs.
It is important to note that you will be liable for any negative equity and this will still need to be paid back to the mortgage lender regardless that you are no longer living in the property.
If you have equity tied up in the property, when the property sells, you will receive any of the money left over after the mortgage lender has recovered their costs.
These costs not only include the mortgage arrears but also all the associated costs of the repossession i.e. court costs, auction house fees, solicitors etc.
This is why it’s advisable to try and secure a quick, cash sale for your home, so you can avoid any additional charges and still retain any inflation profit.
Stop house repossession – what are your rights?
Before your mortgage lender can repossess your property, they must;
- Inform you on 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
- If they decide to turn down your offer of repayment, they must explain this decision to you within 10 days
- Your lender must 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. We take a look at some of the leading causes of repossession and how they can be avoided:
If you fail to keep up with your mortgage payments, this 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 sum is not rectified they are able to start proceedings. This involves obtaining a warrant of ejection from the court, and 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. If this is the case, 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 down 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. These can be fought in court, and in the event your home is repossessed, 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 their 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 rearrange a repayment plan or receive some reprieve while you get your financial affairs in order to avoid house repossession.
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 for stopping your house being repossessed as the average time to sell a house in the UK is currently at 295 days.
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 specialize in the quick sale of repossessed houses to help those who are struggling financially get their heads back above water.
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. That’s why we offer you an instant decision over the phone and can arrange for a fast valuation of your property carried out by independent, local estate agents.
When selling on the open market, you may encounter delays owing to anything from market conditions to the décor and period of your property, the location, the marketing process and more. When selling a home fast to Quick Move Now, you can avoid all of this, as 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 unable to keep up with your mortgage payments and are worried about the repossession of your home, selling your home quickly and directly to us is the easy way to avoid this process.
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.