How To Stop The Repossession Of Your House

If you are behind with your mortgage and worried about losing your home, the first step is the hardest but do not panic. People do not realise that there are ways to cope with repossession. In this guide on how to stop repossession of your home, we will explore some reasons you may find yourself in this position, as well as discuss the options available to you.

In this article

What is house repossession?

House repossession is when your mortgage lender secures a court order to take over the possession of your home. When you take out a mortgage to buy a property, that lender effectively owns a financial stake in your home, however, if you begin to miss repayments, mortgage lenders can gain full possession of the house and will sell it to recover monies owed.

Repossession typically occurs after three or more consecutive missed payments, and it is seen as a very last resort. Lenders will always try to arrange alternative repayment plans with you first.

What happens when your house is repossessed?

You should continue to propose alternative, reasonable ways to repay your arrears and mortgage to your lender throughout the repossession process – they may even agree to a repayment plan at any point up until the day of eviction.

Repossession is a last resort for lenders. Now, let’s look at the process involved in possession claims. It starts with missed payments.

• I have missed mortgage payments

Typically, being a few days late with a mortgage payment is not grounds for concern. If you miss a mortgage payment entirely, your mortgage lender will write to you
concerning your arrears. If you continue to miss payments, your lender will continue contacting you. The worst thing that you can do is avoid these communications.

You should use this time to attempt to settle a repayment plan that is manageable for both you and your lender. If the lender rejects your proposals, you’ll be issued with a second warning about your arrears, which will outline their plans to begin court action to repossess your home if you don’t make a payment.

Note: when you are making suggestions as to a repayment plan or to get out of arrears with the lender, make sure these communications are written to have a paper trail for later reference.

One step to consider is selling your house. If you provide the lender with a copy of the listing and marketing materials. Even more favourable, if the house is under offer or sold subject to contract, you can have an estate agent or solicitor provide a letter with a timeline for exchange and completion.

• I have been issued a court order

If you do not or cannot make payments in a repayment plan, your mortgage lender will apply for a court order to repossess your home. This application will detail why a judge should grant the lender possession of the property, and it costs £325 to submit. If the lender is not claiming rent arrears, they can apply for an accelerated possession order which costs £355, which would see you evicted even sooner.

• I have received a date for a court hearing

You will receive a date for when your case will be heard in court. You must attend so you can explain to your mortgage lender and the judge the reason for your missed payments and the proposals you have suggested to the lender. The judge will evaluate the evidence provided by both you and your lender, so written suggestions are vital at this point to show the judge that you have tried all you can to remedy your house repossession out of court.

Do not put yourself at legal risk or greater financial risk by ignoring a court hearing date. If you feel you need advice and assistance before then, by all means, contact Shelter or Citizens Advice: these organisations are there to help.

Ahead of your court date, you should fill out the N11M personal defence form. This is your response to the lender’s repossession actions. Fill this out to the best of your ability, and don’t be afraid to seek help from a trusted resource (e.g. financial advisor, housing charity official, etc.). It is also advisable to fill in the N244 County Court Form. This asks the court to suspend the repossession process.

• I am being evicted from my home

If the judge rules in your favour, you will have to sign a new repayment agreement – if you don’t stick to this, you will be evicted. If you do not leave within the allotted time, bailiffs will be sent to remove you. The lender will apply to the court for a warrant to allow the bailiffs to repossess your home by force – if this happens, you’ll receive a written warning about when this is going to occur. Being removed from your home in this way is frightening and can even be traumatic, particularly if you have children. It is best to avoid this and leave the property within the timeframe given by the court.

How to avoid repossession of your home

Contact your lender

If you’ve missed – or are going to miss – repayments, contact your lender as soon as possible. You should do this in writing so you have a paper trail that you can reference back to if you are taken to court. The repossession of house and property is a costly process for lenders, and, as previously mentioned, it’s the last resort for them. They also have to follow pre-action protocol rules – you can read more about those here. In short, all mortgage lenders must comply with regulations imposed by the Financial Conduct Authority (FCA). There are clear standards around how they are allowed to handle customers, which are called the Mortgage Conduct of Business (MCOB) rules.

There are things you can ask from your lender, such as:

• Extending your mortgage term
• Change your mortgage type
• A payment holiday (a break from making payments)
• Reduced payments
• Capitalising the arrears (adding them to your total mortgage amount)

Just because you’ve asked, doesn’t guarantee that you will be granted them but it does give you some level of protection. According to the FCA, they are required to:

• Make reasonable efforts to arrive at a viable agreement over payment arrears.
• Liaise with a third-party source regarding your payment shortfall (this third party will provide advice).
• Allow you to make up a shortfall in a reasonable period.
• Explore the possibility of a payment plan.
• Consider your request to change the mortgage payment date or method.
• Allow you to remain in your home for a reasonable period to sell the property.
• Repossess is only the last resort if all other reasonable attempts should fail.

Voluntary repossession of house

Another option to stop a full repossession is a voluntary repossession – though this still involves handing over your property to your lender. This option avoids court fees and sometimes means you can stop making mortgage repayments, as when your house is repossessed, you are still liable to pay the interest on your debt until the lenders have sold the property to recover their costs.

Again, while you still lose ownership of the property, voluntary repossession may take a great deal of the financial burden oE of your shoulders and allow you to move on more quickly – and less expensively. This is another issue that you can discuss with a financial advisor or housing charity.

Rent out your home

Renting your home is a creative solution when faced with debt arrears and house repossession. Consider taking on a lodger to live alongside you, or if you can, stay
elsewhere and rent out your whole home. This income could cover a significant part (if not all) of your mortgage repayments. If you decide to go down this route, you should speak with a financial advisor or even a letting agent to ensure you’re not breaking any laws on contracts, and you must keep the wellbeing of your tenants at the forefront.

You must ensure that your lender has no restrictions on letting a portion or all of your home. You do not want any further trouble in that area. Next, if you can do this
according to the terms of your agreement, then carefully vet the renter. Another area of trouble you certainly do not want at this point is unreliable renters who do not pay on time (or at all) or who cause damage and destruction to the property. Make sure that all rental agreements are legal and binding – and that they help protect both you and the renters.

Consider a quick house sale

If you know that you can’t pay your mortgage or clear your arrears, you should try to sell your property before you consider voluntary repossession. However, you may struggle to sell it due to circumstances such as a bad market or the condition of the property. Most people are unaware of how a quick house sale can stop repossession. A reputable cash buying company differs from the ‘traditional’ house sale where you have to pay estate agent and solicitors’ fees, valuations, as well as potential upgrades and improvements to the property.

When you work with a reputable company, they will send you an initial offer – which may be called an ‘offer in principle.’ At this point, the house buying company instructs valuation experts to inspect the property. You may have also heard these businesses referred to as ‘We buy any house’ companies. This means that you can sell ‘as is’ without committing significant funds – and time – into upgrades, renovations and improvements.

Upon receipt of the valuation and RICS reports, the house buyer will issue a formal offer. This may differ from the initial offer if they discover issues that will impact the value of the property, such as a leaky roof or faulty wiring. Typically, they will make a fair and appropriate offer that is up to 75% – 85% of the total market value. Remember that you are not paying for estate agents, solicitors, conveyancing, valuations and other aspects of the conventional sales process, so this equation may very well work much in your favour.

If you do choose to continue and accept the formal offer, you move towards completion. In as little as three weeks, your house can be successfully sold, and you
receive a deposit directly into your bank account. This should allow you to comply with the timeline imposed by court order if you have one in place.

If my house is repossessed, can I get another mortgage?

If your previous home has been repossessed, you may still be able to get a mortgage in the future. However, this will be dependent on a variety of factors, including how recent your repossession was, the size and reason for your repossession and how good your credit history has been since. Not every lender will approve you for a mortgage if you’ve had a previous home repossessed, especially if it is in the last three years.

One of the most important reasons to prevent repossession is that this adverse credit situation does make it more difficult to receive financing in the future. Lenders will examine the details of the repossession (date, the amount in arrears, etc.), your current financial situation, and your credit since the repossession occurred. If your house was repossessed five to six years ago, the odds of getting a mortgage are good to great. If it was less than a year ago, it is nearly impossible to be approved. While there are lenders who specialise in loans for those with bad credit, even they may not approve you at this point. Lenders also will look at whether you are still in debt and what your current financial status is like. If you have worked to rebuild your credit or if you are earning more money and saving money now, then your chances of approval are higher.

It is possible to get a mortgage after repossession, but it is not always easy.

Can I get my home back after repossession?

Theoretically, you can get your home back after repossession, but you would need to be able to cover all associated costs, including the mortgage and arrears first. If you were to sell your house through a regulated property buyer such as Good Move allows you to sell your house without paying any estate agent or solicitor fees. It’s a fast solution that stops repossession efficiently – with Good Move specifically, we aim to buy your property within three weeks for up to 85% of the market value – all for cash.

It is essential that you understand, explore and weigh your options. A quick house sale may be one of these open to you, and depending on your situation, the best route to take. For example, if you have had a life change and can no longer afford your mortgage payment, freeing yourself from the house may be the right, albeit hard, decision.

If you need to sell your home to stop house repossession, we can help you sell your house quickly, and for a good price. Get in touch with our team for a fast valuation and offer.

Resource that can help

If you’re uncertain about how to stop home repossession, speak to a legal or financial advisor – they’ll be able to help in figuring out the next steps. You should also speak with a housing charity or not-for-profit; a free call can give you access to impartial – non-judgemental – information that can assist you in deciding on a plan.

Please consider accessing help and resources through:

• Citizens Advice. They offer a host of invaluable online resources and tips.
• National Debtline. This is a great resource for education and advice regarding money issues. They are open six days a week (excluding Sunday) at 0808 808
  4000, and they have a wealth of information online.
• Debt Advice Foundation. Receive confidential advice and guidance about loans and debts at 0800 043 4050. (Also open every day except for Sunday).
• The Money Charity. You will find online resources around debt and budget management.

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