02 Nov How to Avoid Repossession of Your Home
How to avoid repossession of your Home
Your home is your most prized possession and with most mortgages last upwards of 25 years there is a chance that at some point over that time period that you may come into financial difficulty. Unless you have a good pot of savings or a decent level of cover then if you don’t keep up with repayments then your home may be at risk. In this blog, we will look at how to avoid repossession of your home.
With the job market taking a turn for the worse with companies like Debenhams, Evans Cycles both projecting possible job losses on the cards and also John Lewis revealing they are to let go of 1800 members of staff, many fear that we will see an increased rise in home repossessions. According to your money, the list of those in mortgage arrears and repossessions is likely to rise this year. They spoke to they spoke to Jackie Bennett who said: –
“UK Finance has been coordinating efforts with lenders, debt advice charities and others to try to ensure recipients are made aware of the changes and take action. We have also been liaising closely with the government. Lenders have been contacting customers and discussing options with them for making up the payments if they do not want to take out the loan. However, that’s not an option for everyone and unfortunately, some may fall into arrears. Repossession is always a last resort and we will continue to monitor the situation closely over the remainder of the year,”
So if the unthinkable has happened to you and your finances have been sent into turmoil, then what is the best way to avoid the repossession of your home.
Talk to your lender
The first port of call would always be to always be to talk to your lender as they have to follow a specific protocol when dealing with people who are facing repossession. According to Shelter, your lender must treat you fairly. They must consider any reasonable suggestions you make to pay off your arrears. Before taking any steps to repossess your home, your lender must try to discuss your finances with you and give you a reasonable chance to pay off the arrears. The lender must also give you the following details:-
Your payments over the past two years
Your monthly instalments
How much is left to pay on your mortgage
The interest or charges that will be added
It is advantageous for you to put forward a proposal for the lender to advise how you would be looking to pay the outstanding balance before they start repossession proceedings. If they don’t accept the offer that you put forward, then they must give you written notice of this within seven days.
Your lender must then make a reasonable suggestion for you to avoid having your home repossessed. The proposal that is put forward to you by your lender MUST be easy to understand and they should also offer you a reasonable amount of time to consider what they are proposing for you.
Any arrangements that you make with the lender must be kept and if not they can give your 15 days notice to take you to court and face the prospect of repossession.
Do you have mortgage cover for times like this?
Mortgage protection insurance will normally cover the cost of your mortgage payments for a specific time period if you become unwell or lose your job. We here at Home House Buyers have had a look at the two types of policies that are offered. The first being a policy that will cover your mortgage payments or get an insurance policy to protect your income both can help you when things get tough.
The second option for protecting yourself is to take out a protection insurance specifically to cover your mortgage payments or get general income protection insurance (where the payments you would receive could be used for anything).
Although times will obviously be tough offering something can show some good intent from your side.
If you can, pay something towards your mortgage arrears, this may be a lot to ask as your finances may be low but it will show that you are willing to reduce the debt and can stick to an arrangement during a tough time.
Change your mortgage product or terms?
It may be an idea to see if you can look to change what type of mortgage you have: –
See if you can look to reduce mortgage term to reduce your payments down
Change the type of mortgage product that you have
Some lenders allow what’s called a ‘payment holiday’ so ask if they do
Speak to your lender to see if you could reduce your payments down
Ask if you can add the arrears amount to the total mortgage
Take matters into your own hands
If you have a repossession pending then it may be an idea to either look into one of the following to help reduce the pressure in the situation.
You could look into selling your house fast? There are many companies out there that can offer to sell your house within 14 days allowing you to move on.
Do you have a spare room and if so would you be willing to rent it out to bring in some extra income? There are many online companies that could help you rent your spare room.
Renting your property out may be an option. Depending on your mortgage and the rate of rent that you could get could get your out of trouble until you can get your finances back in order. Check what the going rate of rent could be of a property of your style here.
What about Negative Equity?
If you are falling behind with your mortgage payments but you are in negative equity then what should you do? The first thing is you contact your lender to see if they will allow you to sell your home with negative equity. They may allow you to do this then take off the remaining balance as a secured debt.
If you would like to read up more about the repossession process then we also have a detailed blog on stopping house repossession.