If you are in a position where you potentially face your property being repossessed, then it can be a stressful and serious situation; However, it isn’t one that will just happen overnight. Repossessions can take many months and can be hard when you need to be proactive with your search.
This article is going to look into repossession as a whole and what it means to be in mortgage arrears. If you have a particular question in mind, we've added a section so you can quickly navigate below:
- What are mortgage arrears?
- Can you miss a mortgage payment?
- What happens when you are in arrears?
- Pre-empting the arrears process
- How many months mortgage arrears before repossession?
- What is the house reposesssion process?
- What should I do when the arrears process starts?
- What is the house reposesssion process?
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Mortgage Arrears is when you have missed a payment of your mortgage and you have payments overdue on your property. In technical terms, a mortgage goes into arrears when you first miss a payment. On the other hand, a handful of mortgage lenders give an unofficial period of around 15 days before they contact you about missing the payment.
Even if you do miss a payment and do not manage to pay straight away, possession action will not take place straight away. Lenders usually don’t want to repossess any of your possessions; they will want to use this strategy as a last resort.
Possession action will usually be taken to an action when you have missed at least three payments. Although, some lenders will postpone this even further than three payments.
Missing a single mortgage payments will not result in your mortgage lender reposessing your house, but it will result in questions around why you have failed to make the payment. They'll typically contact you and ask if you are able to pay. It could also affect your credit rating.
Mortgage companies don't want to reposess your house, it's an expensive process, so missing a single payment they will usually be fairly understanding and work with you to try and resolve the issue.
Mortgage lenders can’t just turn up to your home and make you leave. There has to be a process followed beforehand. This is called Pre-Action Protocol for Mortgage Arrears.
This process makes sure that you, the homeowners, is fully notified of what is happening. This therefore allows you to solve the issue before any of the repossession processes start happening.
Generally, lenders will give you around fifteen days to respond to any standard letters sent to yourself.
If you are uncontactable then you will eventually be told that if you don’t pay the arrears to your lender, you will be taken to county court for the repossession of your house.
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An approach you could consider, if you realise you are going to struggle to make a payment, is to speak to your lender before they contact you in the first place.
If you pre-empt the process by contacting your lender, it can often help lenders to see how you are approaching the situation with a lot of responsibility. It conveys you are more committed to paying off any arrears you are likely to build. If you do this, you still need a plan in the end.
As we've mentioned the last thing that mortgage companies want to do is repossess your home and it's a final resort as for them it's costly. It depends upon your particular lender, however most won't start repossession proceedings until around the 3rd month payment being missed at the earliest.
Here is generally the process for a reposession in the UK:
- The lender will contact you about the arrears & try and arrange a way of paying it back
- If it continues the lender will seek court action
- You will be sent paper work from the court on your hearing dates and details
- You attend the hearing, if you don't turn up there will likely be an outright posession order
- The court makes a desicision, an outright order which means leaving within 4 weeks, or a suspended order that allows you to stay in your home and gies you a schedule of repayments to pay a set amount over your normal monthly payment
- Baliffs may be able to evict you if you have an outright order or breach your terms of a suspended order
- The lender will sell your home
To start with, never ignore any letters you receive from your mortgage lender. Contacting them immediately can slow or even halt the repossession process. Ignoring the situation can make it accelerate.
If you are able to make a payment or even a part payment, then do so. Or, even suggesting a repayment plan to your lender in order to settle the arrears is a positive step forward.
Within this, there are other things that can be done to help your situation. Under the Protocol for Mortgage Arrears, the lender needs to give you the opportunity to do so. These situations include claiming against any mortgage payment protection insurances, claiming through government support as you may be entitled or rescheduling any payments you have left on your mortgage.
There are several things you can do to try and stop a repossesion beforeit even goes to the courts, here are a few tips:
- Keep in constant communication with your lender, talk to them and be clear about the situation
- Try to improve your financial situation and catch up mortgage payments
- Work out a repayment plan with your mortgage lender
- Speak to a debt adviser
- Pay back as much as you can, when you can
A further option you have is to sell your home quickly to try and recover the money that you've already paid into it before it's repossessed by your lender. If you can cover the cost of your mortgage, the outstanding repayments and still come out with money then this is a good option.
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