A repossession is what happens when a mortgage lender takes possession of a house when the buyer defaults on their payments. Recent statistics have shown that there were a total of 6147 mortgage repossessions to private individuals and landlords in the last quarter of 2022.
Understandably, the thought of losing your house is scary. However, you should know what you can do to stop the process. You may still have legal protection despite being behind on your payments.
What is a repossession order?
Before learning about the best course of action during a repossession, it’s important for you to know a few things about the repossession order itself. First and foremost, a repossession order can only be enforced if permission is granted by the court. There are different types of repossession orders that you should know about.
- Possession order
This order gives the lender legal rights to have ownership of an individual’s house. If that person fails to leave the house, the lender may ask the court to have them evicted.
- Suspended possession order
This order basically states that the person whose property is being repossessed has to make payment, as mentioned in the order. If not, the lender may ask the court for an eviction.
- Money order
A money order cannot be used to evict a person. However, the individual still has to make payment to the lender. If they fail to do so:
- The amount can be deducted from their bank account or wages.
- Bailiffs may take things the borrower owns.
- Time order
This basically means that the judge changes an individual’s mortgage payment amounts for a set period of time. However, that person can still be evicted from that house if they fail to make these payments on time.
Can you stop a repossession order?
As mentioned, the thought of losing your house can be scary. However, there are ways to stop the repossession process and keep ownership of your house. So with that in mind, let’s look at how you can stop a repossession order.
How do I avoid repossession of my house?
Stopping a repossession order is a step-by-step process that might take time and effort. Before we get to the steps you can take, you need to know that the risk of your house being repossessed increases if you haven’t made timely payments for a while.
One Month Arrears
Once a mortgage lender notices you’re in arrears, they will send you a formal notice. Here, you must determine how far behind you are on your mortgage payments. If you haven’t paid the mortgage for just a month but have the money to do so, your chances of repossession are low. Explain your situation to the lender, and make sure to pay off what you owe.
Two Month Arrears
If you’re two months behind on your mortgage payments, things might be getting a bit more serious. However, mortgage lenders must follow pre-action rules. They must inform you about:
- The amount of arrears.
- Your payment over the last two years.
- Your monthly instalments.
- The amount you owe.
- Interest charges.
In addition, the lender should also send you advisors information from:
- The National Homelessness Advice Service (NHAS) Mortgage Arrears Guidance.
- The Financial Conduct Authority (FCA) Arrears Information Sheet.
- The Financial Conduct Authority Default Information Sheet.
As per the Pre-Action Protocols rules, the lender can not start court proceedings if you’ve shown them they can repay what you owe. Therefore you should always communicate your situation to the lender, and you should also record or make notes about the conversations. The mortgage lender must consider your offer and provide a response within ten business days.
Three Month Arrears
If you’re three months behind on your payments, the mortgage lender will likely seek possession, and you may have a court order. Before your court hearings, you should have your N11M and N224 forms filled out. In addition, you should also make a small mortgage payment prior to your hearing, as it may demonstrate your commitment. The worst possible outcome is an outright possession order. However, if you demonstrate your ability to make a payment, you get a suspended possession order or time order instead.
Sell your house fast!
In some cases, it might just be better to just sell your house and take the next step in life. You can sell house fast through a real estate agent, to a private buyer, or through an auction. This’ll allow you to take control, pay off the mortgage arrears, clear the debt, and will ensure that the repossession is off your credit report.
Do I have to declare repossession?
A repossession might stay on your credit report for around six years. However, if asked as part of a mortgage application, you may still have to declare whether you’ve had a property repossessed before or not.
Property repossession is when the lender takes ownership of your house after you’ve failed to make mortgage payments. However, there are ways to avoid repossession. When issued a notice, it’s best to clearly communicate your position and ability to pay back the lenders. In addition, selling your house is a feasible alternative as it can help you pay back what you owe. Reach out to us now and learn how to help you sell your house fast!