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Repossession: The danger of losing your home

The rate of repossession claims in parts in London shows how residents across the capital are losing their homes at an alarming rate.

Repossession Statistics from Shelter show that 17 of the worst 25 local authority areas for repossession claims were within the Great London area.

In the borough of Newham in East London, one in every 36 households experienced a possession claim. In Barking and Dagenham, the figure is one in every 38 and it is one in 42 in Haringey, Southwark and Waltham Forest.

Beyond London, Nottingham and Peterborough (both one in 57), Manchester (one in 61) and Salford (one in 63) all suffer from a repossession claim rate that is much higher than the national average of one in every 108.

A Shelter spokesman said of the study: “It shows that there are ‘hotspots’ where as many as one homes in every 36 could have been at risk in the past year. London local authorities dominate the list, taking the top 13 places, and 16 of the top 20. Whilst the highest risk areas identified were in London this is not just a London problem, with hotspots identified all over England.”

The most recently available Government data for repossessions shows that almost 30,000 homes across the country are repossessed every year. While that number has reduced from the peak of 2008/09 – in the aftermath of the financial crisis – it is much higher than the rate in the early 2000s when it dipped below 10,000.

Mortgage and landlord possessions statistics show that there are also more than 40,000 households in mortgage arrears of 12 months or more, many of which are teetering on the brink of becoming next in line to be repossessed.

The Bank of England’s recent decision to cut interest rates to a record low of 0.25 per cent might well help to stave off some repossessions, but it will not matter to those people already in severe trouble and shouldn’t lead to complacency among people who fighting the tide and living in a home well beyond their means.

Circumstances change, don’t let things spiral out of control

Repossession is the end of the line and is often the result of a series of problems. None of us has a crystal ball, so when we take out a mortgage or enter into a tenancy agreement we cannot know for sure what will happen during that period.

Losing a job, becoming seriously ill or ending a relationship could drastically alter anyone’s finances and leave the rent or mortgage repayments beyond your reach. At that point, your home can stop feeling like an asset and become more of a millstone around your neck.

For people in financial difficulty, it is important that they stay calm and realise that they aren’t powerless. It is possible to speak with experts and stop home repossession if you act quickly. For some people, it might be necessary to sell their home quickly and start out on the path towards a set of financial circumstances that are more appropriate.

Avoiding repossession also allows you to avoid the unsavoury side effects. Mortgage lenders will, for example, ask the Council of Mortgage Lenders to check if you have ever had a house repossessed before agreeing to hand you money – meaning that it will affect your future chances. You might also have to appear before a county court and, if your home is sold by a mortgage lender and the incomings don’t cover your total debt then there’s a danger that it still won’t be the end of the road. That could even lead to bankruptcy or insolvency – another stain on your financial record that will hamper your attempts to recover. (The Money Charity notes that 247 people a day are declared bankrupt or insolvent in the UK)

Selling a home quickly – in a matter of days and not months – means not waiting for all of this to build up and overwhelm you.

There’s no easy way out, but it isn’t necessarily an inevitable spiral towards being forced from your home and adding another number to the next set of statistics.

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