Being threatened with the repossession of your home has to be one of the most stressful events any homeowner can experience. After all, this isn’t just bricks and mortar — it is your refuge from the outside world.
But burying your head in the sand won’t make this problem go away. The simple truth is that faster you act, the greater the chance of holding onto your home. Even if repossession becomes inevitable, however, you still have options — you just need to know what they are.
Ideally, you should be on the phone to your lender the moment you receive a formal notice of repossession proceedings through the post. If you simply ignore this letter, the chances are the process will progress even faster.
Speak to someone who can help with practical solutions, and be completely honest about your situation. It’s important to remember that lenders don’t like to repossess homes, as they rarely recover the full amount outstanding at auction.
There is a chance at this early stage that you’ll be able to agree a repayment plan, a payment holiday or another short-term fix.
Repossession proceedings take several weeks, so you have some time to sort things out. The worst thing you can do at this stage is panic and make the wrong decisions. No one is going to turf you out of your home for quite some time — and that’s only after a court hearing.
The court has a responsibility to protect the assets of your lender, but it also has a duty of care to you and the wider community. This means you will get your chance to make your case, if things get that far. But by making calm, rational judgments from day one, there is a good chance your case will never go before a judge.
Know Your Options
The best way to resolve a potential repossession is through dialogue with your lender. If you can demonstrate your ability to make repayments from this point, there is a chance that the lender will agree to adding your arrears to your balance. If you have an endowment policy, you might be able to cash it in (or part of it) to repay your arrears.
There are also ways to reduce your monthly repayment — the most popular of which is switching to an interest-only loan. And you may be able to reduce your repayments to zero for a limited time by agreeing a repayment holiday, depending on the terms of your mortgage.
If you and your provider can’t agree a way forward, you still have options before any possible court hearing. For example, you could rent out your house, and use the proceeds to cover mortgage repayments. You might also want to take in a lodger or two to generate extra cash. And one final option involves turning to a house buying service such as Flying Homes — you can find out more at this link.
Selling your property directly to a property buying company cuts out the time-consuming marketing stage of the process. If all goes well, you could receive your funds within just two weeks — more than enough time to pay off your mortgage and save your credit rating. These companies usually take care of legal issues, which is always a welcome relief when homeowners have been worrying about repossession for some time.
What Happens if the Repossession Continues?
If all your attempts to renegotiate with your lender, raise funds and sell your property quickly have failed, the chances are your case will end up in court. If this happens, the judge might dismiss the case if the correct procedures haven’t been followed. There is also a chance that the repossession ends up being suspended — giving you more time to pay. But in most cases, any case that reaches the final stage ends up in repossession.
My Home Has Been Repossessed. What Next?
Unfortunately, interest will probably continue to accrue on your home loan until your property has been sold at auction. If your home fetches more than your outstanding debt, you’ll receive the difference. If, however, there is still a balance on your account after the house sale completes, you’ll be liable for it. In many cases, residual debt is passed to a specialist debt collector.
Many repossession proceedings never reach court, and that’s because new funds are found, an agreement is reached with the lender or the house is sold quickly. But the key to avoiding legal repossession is swift action — so take control of the situation, instead of letting it take control of you.