Stop Repossession

Understanding how to prevent the unfortunate event of home foreclosure is crucial in safeguarding your property and avoiding a catastrophic situation. Shockingly, research indicates that a significant number of homeowners lack knowledge on effective strategies to evade repossession.

While most banks and lenders strive to steer clear of foreclosures, the ultimate outcome largely hinges upon the actions or inaction taken by debtors themselves.

What Exactly Does Repossession Entail?

Foreclosure transpires when mortgage lenders seek legal permission from the court system to seize your property due to non-payment or failure to adhere strictly to mortgage terms. When you enter into a mortgage agreement, you grant the lender an ownership stake (expressed as an interest percentage) in your home. Although their share diminishes as you diligently repay borrowed funds, it's important not to overlook their prerogative for pursuing repossession if payments are neglected.

This implies that even if you've successfully paid off 85% or 95% of your mortgage balance, there remains a possibility for repossession should timely payment obligations be disregarded. Therefore, it is vital to take preventative action as soon as possible.

How Does Repossession Work?

Banks and lenders rarely seek repossession orders without first considering all other viable options to resolve the issue. Where a bank chooses to pursue the repossession of a property, the process generally takes place as follows:

1. Mortgage Arrears

Missing the occasional mortgage payment is not typically grounds for repossession. You may face late payment fees or other penalties, but your lender will usually give you fair warning, along with the opportunity to make up your repayments.

It is only when mortgage arrears become relatively serious that repossession proceedings begin. With regard to how to stop a repossession order being sought, it is vital to speak with your lender at this early stage to reach a mutually amicable agreement.

2. Court Order Application

A formal application to the courts is made from the finance lender to repossess your home. This would firstly involve the hearing of a court case where your attendance is mandatory. The judge presiding over the case will hear evidence and listen to arguments on both sides of the dispute, ultimately determining whether to grant a repossession order.

3. Repossession Order and Eviction

If the lender's application for a repossession order is successful, the occupant of the property will usually have a period of 28 days to move out. This may be extended to 56 days in some cases upon request or appeal.

It should be noted that any court fees expended on both sides will be added to the borrower's on-going debt, frequently dramatically increasing the total owing. When the resident of a property refuses or is unable to leave their house by the agreed-upon time, they may be forcibly removed along with their things.

How to Avoid Repossession

Understanding how to stop the repossession of your home through constructive dialogue is essential for all homeowners. Nobody plans to fall into arrears or deliberately fails to meet their repayment obligations; hard times and financial shortfalls often cannot be predicted.

There are various options available for stopping a repossession becoming necessary, which for most struggling homeowners include the following:

1. Reach out to your lender

Major Banks and lenders are often willing to stop repossession in its tracks, simply by discussing the issue with the borrower and coming up with a viable repayment plan. This could include a temporary suspension of your repayments until you get your finances back on track, a lower monthly repayment you can afford or anything else that allows you to gradually repay your debt. Acting early is essential as leaving things until the last moment makes it more difficult to reach an acceptable agreement.

2. Repay a significant sum of the loan.

Even if you are unable to pay off your finance amount completely, indicating that you are willing and working towards doing so will show the lender you are serious about making good on your commitments. To avoid the need for repossession, this should be considered as soon as feasible.

3. Consider a bridging loan

If your financial shortfall is strictly temporary, you could consider securing a short-term loan against your home. One example of which being a bridging loan, which can be issued in a matter of days and repaid in full within the subsequent few months. This opens up the possibility of repaying your outstanding mortgage balance in full, selling your home for its full market price and repaying your bridging loan in one lump sum. All remaining profits would be yours to keep, which could be used to finance a new home purchase when the time is right.

4. See if you're covered by mortgage protection insurance

It's always worth checking whether you are covered (fully or partially) by a mortgage protection insurance policy. Many homeowners enter into such policies when taking out a mortgage; though do not fully understand the extent to which they are covered.

Depending on the circumstances of your financial shortfall, your mortgage insurance policy could cover your repayments to avoid home repossession entirely. For more information on short-term borrowing for covering urgent expenses and outgoings like these, book your obligation-free consultation with the team at UK Bridging Loans today.