“My house is being repossessed! Can you help?” is something we hear a lot at House Buyer Bureau. When you’re faced with repossession, it can be a daunting and uncertain time, and it throws up a lot of other questions with no definitive answers. What happens if you have nowhere else to go? Does your house being repossessed definitely mean you’ll get evicted? Perhaps the most important question is, “What can I do?”
In this guide, we’ll look at how repossession happens and outline the three steps you can take right now if your house is being repossessed.
How Repossession Happens
Repossession is what happens when you miss mortgage payments. As the word suggests, it is the act of retaking possession of your home because you cannot afford it. When your mortgage repayment date ticks by without you making a payment, you are then in arrears.
If this happens, you will not be threatened with repossession immediately; most lenders give you a grace period of 15 days before contacting you to chase your failed payment. Providing you make the payment during this time, you typically won’t be penalised. That said, it’s good practice to make your mortgage payments on time, and we’d never recommend taking advantage of the grace period unless absolutely necessary.
It’s only after this grace period and no payments have been made that your lender may escalate the situation to repossession.
The process of repossession itself can depend on a range of factors, which means the time from missing a payment to having to leave your home can take anywhere from five months to a full year.
Losing your home is not always inevitable if you are proactive and take steps towards agreeing on a resolution with your lender. It is, however, sensible to prepare for the worst, and if your house is being repossessed, taking these steps can buy you time to get your affairs in order.
My House Is Being Repossessed: What Can I Do?
If your house is being repossessed, there are several steps you can take to resolve the situation or at least give you more time before you have to move out. Before we look at these, though, there’s one vital thing you must not do.
Don’t: Avoid Taking Action and Put Your Head in the Sand
When you default on a payment, panic can set in. You might try to ignore the situation, casting aside the unopened urgent envelopes and letting your calls go to voicemail, hoping it might all go away. Unfortunately, all that will do is make the situation worse.
The more you ignore the situation, the faster your home will be repossessed. As soon as a court order has been made for repossession, you’ll have just 28 days, in most cases, to pack up and leave your home.
Do: Talk to Your Lender
When your house is being repossessed, the best step you can take is opening the lines of communication with your lender as quickly as possible. Repossession is not something banks and lenders will do lightly, and it’s usually only ever done as a last resort.
It can be embarrassing being in arrears and not being able to pay your mortgage, and the longer you leave it, the more you’ll likely want to put it off. But being honest can go a long way to determining a solution, or at least keep you in your home for longer.
You do not need to have only recently gotten into arrears to be able to take this step — you can start talking to your lender even if they’ve already taken steps to get a court order to repossess your home. You may be able to reach an agreement to start paying back what you owe on a schedule that works for both you and your lender. Be aware, however, that if court action has started, you will still need to attend court to explain your agreement to the judge.
Do: Work Out a Repayment Plan
After getting in touch with your lender, the next step is to try to work out a repayment plan. While you may not be able to pay your full monthly instalment, along with additional payments you may have missed, your lender may accept a smaller payment. This can show goodwill and go a long way to repairing the relationship and delaying — if not preventing — your home from being repossessed.
Your lender is obligated by law to consider any requests to change the way you pay your mortgage and any offers of payment you make.
Do: Sell Your Home
If you’re in arrears and the value of your home is significant enough to cover the costs of your mortgage and arrears and leave you with enough to set up somewhere new, it’s worth considering selling your home. You have the right to sell your home at any time — even if court proceedings have started — until your mortgage lender physically takes possession of your home.
However, selling your home can take time — time you may not have if you are behind on your payments and your house is being repossessed. On top of this, there is no guarantee that your house will sell. At House Buyer Bureau, we can guarantee an offer on your home regardless of its history, location or condition, allowing you to sell your house and be debt-free in as little as seven days.
Going to Court When Your Home Is Being Repossessed
If the repossession process has started, you may face court action. Your lender must give you written notice at least 15 days before starting court action. They must also tell you the time and date of the repossession hearing and inform your council of the date within five days of receiving notification from the court in the event you need to apply as homeless.
When your lender starts a repossession action, you will receive a defence form from the court, which you must return within 14 days. This gives you an opportunity to explain why you think the lender should not repossess your home, as well as detail the efforts you’ve made to make an agreement to pay your arrears. This is why it’s vital to speak to your lender as soon as possible.
The repossession hearing itself will take place in a judge’s chambers. Your home cannot be repossessed unless the judge grants a repossession order. A repossession hearing does not mean you will be evicted from your home, and there are several decisions the judge may make, including granting a suspended repossession order, which will let you stay in your home on the condition that you make regular payments as agreed and set out in the order.
Important note: If your home is currently being repossessed and any court action falls within the 90 days after 27 March 2020, your lender will not be able to evict you due to coronavirus.
If your house is being repossessed and you’re considering selling your home to get out of arrears and make a fresh start, you can sell your home quickly with House Buyer Bureau.