How can we help to stop repossession?

The facts about repossession

A property can be repossessed by a mortgage lender when a home owner misses a number of payments, normally a minimum of three.  The mortgage lender can apply to a court to grant repossession proceedings which if granted allows the lender to take control of the property.

Depending on the circumstances the court may not grant a repossession order and may set out a payment schedule to allow the home owner to continue with the mortgage while paying off the arrears.

How many payments need to be missed before a lender will start repossession proceedings?

A mortgage provider can start to begin repossession proceedings once a customer has been in arrears for three months.

What should I do if I know I’m going to miss mortgage payments?

If you think it’s likely that you’re not going to be able to afford your next mortgage payment it’s important to talk to your lender and explain your financial situation. Mortgage companies make money out of mortgage repayments so they have a vested interest in you paying for and keeping your home.  That said, they also want to ensure that they’re not losing money so they will be keen to step in and reclaim the property if they think you’re going to default.

Talk to your lender and explain your current financial position, including any changes in income and expenditure. If your financial issue is temporary it should be possible to quickly agree on a repayment plan to make up the missed payments.

If a lender has to chase you for payment and receives no correspondence in return this will only lead them to believe that you are hiding from the issue, and will give them the impression that you do not wish to resolve the situation.

If your financial situation has worsened in an ongoing way you also may be able to agree on a repayment plan. The mortgage industry is a regulated market and mortgage companies are required to deal with you in accordance with the Mortgage Conduct of Business (MCOB) rules. This means that they must allow you to make reasonable suggestions as to how to help your situation. They do not have the power to simply take your home without any due diligence on their end.

What options are my provider likely to offer?

Mortgage providers will try to offer solutions that work in the interest of both parties. They will want to keep you as a customer if they think you will be able to pay the mortgage long term. Depending on the type of mortgage, amount left on it, current interest rates and the customers’ financial situation, the lender may offer some of the following solutions.

* Extending the length of the mortgage – This would allow the homeowner to potentially make smaller payments that are more manageable. This may make the mortgage more expensive to the homeowner over time but can provide some breathing space financially.

* Delaying interest payments – This can reduce payments in the short term to make them more affordable but can lead to a more expensive mortgage long term.

* Offering an alternative type of mortgage – This could again offer the homebuyer a more favourable type of mortgage, at a different rate or length. These options being offered will greatly depend on the type of mortgage, property value and your current financial situations.

Talk to a debt advisor

If you are in a difficult financial situation and struggling to see a way out of it you should try speaking with a debt advisor. They may be able to provide helpful financial advice.

The National Debt helpline is a charity which offers free advice. You can contact them here. Or call 0808 808 4000.

If you don’t want to speak to someone you can get advice by email here.

Is there a way to stop house repossession?

Stopping repossession depends on a lot of the factors mentioned above. To try to prevent it the key things to do are:

* Try to avoid missing 3 months of payments.

* Maintain contact with your provider and keep them informed.

* Attempt to pay as much as you can to the lender even if you cannot make the full amount.

* Try to work out a new mortgage deal with the lender that’s more favourable to you in the short term.

It may be a good idea to sell your home if possible as this could allow you to downsize and restructure financially. Selling a home isn’t easy but if you keep missing mortgage payments and selling your house would get you out of debt it could be a good way to go. Getting a valuation from local solicitors won’t cost you anything and could prove beneficial.

The breathing space scheme

The breathing space scheme has been set up to help people struggling with debt and can sometimes stop repossession.  If accepted onto it the person in debt will be granted a 60 day breathing space in which creditors will not be able to request payments, enforce evictions or repossession notices and freeze interest or charges on arrears.  There is also a mental health crisis breathing space with similar benefits.

The scheme needs to be applied for through a registered debt advice charity and you will need to show proof of your financial situation including payments and income.

You can see if you qualify by speaking to someone at National Debt or Citizens Advice.