Avoiding Home Repossession

The CML predict that the number of home repossessions in the UK could rise from 30,000 last year to 45,000 by the end of 2008. Although this is a big % increase in repossession, it is important not to panic as it still represents a small % of the total number of households.

What to do if Can’t Pay Mortgage?

Talk to Mortgage Lender. The mortgage lender doesn’t want to have to repossess a house. It is also in their interest to help you avoid defaulting on mortgage payments. They may be able to remortgage your existing deal to a better deal. They may be able to offer a short payment holiday or more likely offer a deal with a lower interest rate.

Switch mortgage products. If the payment holiday isn’t enough, then it is definitely worth considering altering your mortgage deal. Two things that will help reduce monthly payments

1. Extend Mortgage term. Extending your mortgage term increases the total cost, but it does reduce the monthly payments. See 50 year mortgage
2. Interest Only Mortgage. An interest only mortgage means you only pay interest payments and nothing towards the capital repayments. An interest only mortgage is not a sustainable option unless you have other savings. But, it can be useful if you are temporarily without income.

What to Do if You Have Missed a Couple of Payment?

If you miss a payment, your lender will write to you asking how you are going to pay the arrears. If you do not respond or your letter is unsatisfactory they may send another letter giving you 7 days before solicitors become involved. In this case it is always better to try speaking directly to your mortgage lender rather than through solicitors. Shelter or a citizens Advice Bureau should be able to help.

If the case goes to court, then it is hard to stop repossession unless you have evidence of a new payment plan such as a new job.

What Happens After Repossession

A letter from the Bailiffs will give you seven days to vacate the premise. If you are still living there when they arrive, they can evict the occupants by using reasonable force.

What happens to Possessions

The Bailiffs only have access to your house and not your possession. However, if there is an outstanding amount on the mortgage after the house is sold, it may be necessary to come to an arrangement over these possessions.

How To Avoid Defaulting on Mortgage Payments

What to do When You can’t Pay your Mortgage FSA pdf guide