How To Avoid The Repossession Timebomb
If you’re a homeowner, it’s not the bricks and mortar that is keeping a roof over your head – it’s the mortgage that you are paying off each month.
For many people, monthly mortgage payments are weaved into their regular routine and do not cause too much of a concern – but what about homeowners who have recently been made redundant or bankrupt, or have developed a serious illness which prevents them from working?
Property repossession is a legal process where a mortgage lender takes ownership of a property if the promised payments aren’t being met. So, for those who can’t keep up with monthly mortgage payments, they should consider seeking legal advice as their home will be at risk because their lender can legally repossess it to cover the costs. Find out how to avoid repossession of your home below.
If you are having trouble meeting your monthly payments, it is important to take action sooner rather than later – if you ignore it, it will lead to much larger problems in the future. Below are some actions which could help you to rectify the situation, or alleviate some of the stress you are feeling:
Repossession warning signs
When you miss just one mortgage payment you will be in what is known as mortgage arrears. This means you owe your mortgage lender a monthly payment. This rings alarm bells with your mortgage provider, as you have made an obligation to pay the monthly installments set out in your mortgage agreement. However, talk to your lender as they understand that sometimes scenarios crop up, and most lenders give a grace period to settle the amount without any ramifications.
If two mortgage payments are missed, the lender will communicate with you to understand the situation and put a plan in place. Their job is to help you clear your arrears and help you ensure future payments are made. Most lenders are empathetic to situations such as job loss, death, divorce or health issues and will help put an action plan in place for you.
If you fail to communicate with your mortgage provider or do not meet the plan they have set out to help you, they will often make a formal demand for full arrears payment, as well as any other accumulated charges. Often this action will be provoked by a third missed mortgage payment.
Update your mortgage lender
When a situation hits, and you start to worry that you won’t be able to make your next mortgage payment, contact your lender and notify them of any financial challenges you are facing which will result in you being unable to make some or all of your payment. Mortgage lenders consider repossession as a last resort, so if you are honest and inform them of your situation in advance, most will try to help or offer a temporary arrangement.
Consider a mortgage payment holiday
If you reach a point where you simply cannot afford your payments for the impending months, perhaps due to an illness or injury which means you cannot work, then you might consider speaking to your lender about a ‘mortgage payment holiday’. This is an agreement with your lender, which allows you to stop or reduce your monthly payments for a temporary period. Generally, payment holidays last for a few months, after which your monthly payments will increase to make up for the instalments that you missed paying. Although this may sound like an ideal solution, it’s important for you to think ahead, and make sure that you will be able to afford the new increased figure before agreeing to anything.
Alter your mortgage deal
An alternative solution is to speak to your mortgage lender about altering your current mortgage contract. For example, increasing your mortgage term from 20 to 25 years could result in smaller monthly payments which will make them more manageable for you.
How to stop repossession of your home
If your financial problems are causing you too much stress, or you don’t think you will be able to continue paying your mortgage payments for the foreseeable future, you might consider selling your home to free up some money and avoid the repossession process.
If you find yourself in a situation where you need to sell your property quickly, you may opt to sell through a quick home-buying company such as We Buy Any Home. We provide you with an initial offer within 24 hours of contact – enabling completion on a house sale in as little as seven days so that you can start enjoying your retirement as soon as possible.
Whichever route you decide to take, it is important to act now. The sooner the problem is dealt with, the sooner the stress and anxiety you are feeling will ease off.