Every homeowner’s nightmare—getting into mortgage arrears and having your property repossessed. But, as we know life can sometimes throw unexpected curve balls at you—job loss, personal injury that prevents you from working, divorce, death of a spouse or unforeseen damage to your property can all leave you struggling to pay the mortgage.
The good news is, as long as you act fast, you can avoid house repossession. But, the most important thing is not to bury your head in the sand. Instead, plan ahead and make sure you seek help immediately—this will help you avoid a worst-case scenario. Contrary to what you might think, it’s not the banks objective to repossess your house either, if anything they will want to help you prevent it from happening.
So, here are seven ways to help you avoid house repossession.
- Create a budget
It’s easy to let your finances get away from you—especially if you use credit cards and store cards—you can quickly find yourself accruing a large amount of debt. Stay on top of your finances by managing what comes in and what goes out, so you’re not spending beyond your means. And, everyone has rainy days, so put aside some money (even if it’s just a small amount) every month or week, so you have a savings buffer for when times get tough.
- Act Fast
If you do find yourself unable to make your mortgage repayments, act quickly—ignoring it and hoping it will go away will only get you deeper into debt. So, open your mail and don’t let it pile up. And, when you realise, you’re in trouble, immediately arrange a meeting with a legal adviser and with your mortgage lender to discuss options.
- Arrange a meeting with your mortgage lender
Mortgage lenders in the UK have pre-action protocol rules they must follow before they can initiate court action to repossess your home. These rules mean that they have to give you a reasonable opportunity to try to pay your outstanding debt. You can also look at renegotiating your mortgage terms.
Things to ask your lender:
- Can you extend the mortgage term?
- Can you change your current type of mortgage?
- Can you reduce payments for a period of time?
- Can you take a payment holiday, where you take a break of paying your monthly instalments?
- Can you renegotiable the capitalisation of the arrears? In other words, can the lender add the outstanding arrears to the total balance?
- Check your benefit entitlements
If you’re in a panic, it’s easy to forget that you might be eligible for a range of entitlements. These include:
- Your mortgage payment protection insurance should help you cover repayments for 12-24 months giving you breathing space to organise your finances going forward.
- If you lost your job, check whether you are eligible for social security support like Job seekers’ allowance.
- Don’t miss court
If you reach the stage where your lender issues you with a court order to take possession of your home, you still have one last opportunity to demonstrate you can make the re-payments. If you can prove to the court that you can pay off the arrears due to a change in your financial situation, they can overturn the lender’s request for repossession. To do this, you have to provide evidence that you make the repayments for instance proof of a new job and salary.
And, remember even if you’re only able to make a small repayment, the court can interpret this as a sign of goodwill on your part and order your mortgage lender to continue accepting your payments (even if they remain at a reduced level till your financial situation changes.)
Be aware that the court costs will be added to your debt, as well as the cost of bailiffs if they are appointed.
- Know your rights
If the court appoints bailiffs to take possession of your home, you are then given a seven-day warning to leave the property. After this period, bailiffs can enter your home—using reasonable force, if required. But, it’s important to note, they can only take possession of the property, not your things. Your lender is legally obliged to negotiate with you to enable you to retrieve your belongings.
- Sell it yourself
If you’re facing a large mortgage short-fall or your financial situation is unlikely to improve fast enough to meet your bank’s demands, you can sell your property. This way you avoid getting yourself deeper into debt. House Buy Fast can help advise you how best to sell your home quickly if it’s at risk of repossession. For more information, please go here: https://housebuyfast.co.uk/services/stop-house-repossession/