For many homeowners in the UK, the threat of house repossession can be a source of immense stress and worry.
House repossession occurs when a mortgage borrower is unable to keep up with their mortgage repayments, leading to the lender taking possession of the property.
It can be a devastating experience that can leave people feeling helpless and overwhelmed.
However, there are steps that can be taken to prevent repossession and get back on track with mortgage payments.
What is house repossession?
House repossession, also known as home repossession, occurs when a homeowner is unable to keep up with their mortgage repayments and the lender takes possession of the property.
This can happen after a homeowner falls behind on their mortgage payments and the lender issues a repossession order. If the homeowner still fails to pay, the lender can apply to the court for a possession order. In the UK you can be evicted and your home repossessed once the court has made a repossession order.
If the possession order is granted, you will be required to leave. The lender can then take possession of the property and sell it to recover their money.
House repossession is a serious and often distressing process for homeowners to go through, but there are some stages before a repossession order that give you the opportunity to put things right.
Why do lenders begin repossession proceedings?
Mortgage arrears
Lenders may begin repossession proceedings if the borrower falls behind on their mortgage repayments and goes into arrears. This can happen for various reasons, including:
– Loss of income
– Unexpected expenses
– A change in personal circumstances
Lenders have a legal right to repossess the property if the borrower fails to keep up with the mortgage payments, as the property serves as collateral for the loan.
However, repossession is typically viewed as a last resort, and the mortgage lender or estate agents will usually try to work with the borrower to find a solution to help them get back on track with their payments before resorting to repossession proceedings.
How much debt do you need to be in for a court to sell your house?
In the UK, there is no specific amount of debt that will trigger a court to sell your house. The decision to sell a property in order to recover a debt owed to a lender is based on a number of factors, like:
– The amount owed
– The value of the property
– The borrower’s ability to repay the debt
If a homeowner falls into mortgage arrears and is unable to come to an agreement with their lender, the lender can apply to the court for a possession order. If the possession order is granted, the court will usually set a date for the property to be sold.
Ultimately, though, the decision to sell a property in order to recover a debt owed is determined on a case-by-case basis, and there is no set amount of debt that will trigger a sale.
What is the house repossession process?
The house repossession process in the UK can be a complex and stressful experience. The general steps involved in the process are as follows:
Falling behind on your mortgage payments
If you fall behind on your mortgage payments, your lender may contact you to try and find a solution to help you get back on track.
This could include agreeing to a payment plan, extending the mortgage term, reevaluating mortgage interest rates, or switching to an interest-only mortgage payment.
Notification from your mortgage company
Your lender will contact you directly and ask you to find a way of getting your missed repayments back on track. If you get this call don’t ignore it, talk to them and see if you can work out a repayment plan. Tell them what you can really afford not what they want to hear.
Confirmation of court date
If they are not happy with this, they will write to you warning you that they are going to go to court. Once you have had the written warning, they can apply to the courts for a possession order.
Once again, don’t ignore the letter, talk to them. Tell them you want to work with them to resolve the backlog of missed repayments. Do it in writing and on the phone and keep a record, just in case it does go to court. In the meantime, get professional debt help. There are debt solutions that mean you keep your home available, but you’ll need to act quickly.
Hearing in local county court
After trying to work through the problem with your lender, if you haven’t managed to find a resolution and you’ve had a court summons. The first thing you do is reply to the court. Failure to do so will not go down well. It’s still not too late to get help. If you haven’t already, please pick up the phone.
The day when the judge will hear from you and your lender before making a decision on what to do. He or she has a number of options that include:
- Striking out the judgment
- Allowing you to keep your home with a few conditions attached (e.g. you repay the missed payments in instalments)
- Giving you time to sell your property to prevent it from being repossessed
- Deciding you should be evicted and setting a date (normally 1 month after repossession has been granted)
What decisions will the court make?
In repossession cases in the UK, the court has the power to make several different decisions depending on the individual circumstances of the case. Some of the key decisions that the court may make include:
Suspended Possession Order
This is a court order that allows you to stay in your home on the condition that you make regular payments towards your mortgage arrears. If you comply with the terms of the order, you can keep your home. However, if you breach the order, your lender can apply to the court for possession of the property.
Outright Possession Order
This is a court order that gives your lender the right to repossess your property immediately. Once the order is granted, you will have to leave your home within a specified timeframe.
Order to Adjourn
If you attend court and present evidence to the judge that you can make the necessary payments to keep your home, the judge may adjourn the case and postpone the court hearing to give you time to make those payments.
It’s important to note that the court will consider each case on an individual basis and make a decision that is appropriate for the specific circumstances involved.
If you do not understand your decision you must seek advice immediately from a solicitor, a housing advisor or the housing helpline Shelter.
There is help available from a number of sources including the government Mortgage Rescue Scheme. But you do need specialist housing advice immediately. You may find the England Shelter website a useful resource.
How to stop house repossession
If you are struggling with mortgage payments and facing the prospect of house repossession in the UK, there are steps you can take to stop the repossession and protect your home.
Here are some tips:
Get free advice on mortgage debt
There are a number of organisations that offer free debt advice, such as the Citizens Advice Bureau and the National Debtline.
These organisations can provide you with information on your rights, options, and how to negotiate with your lender.
Consider asking the court to set aside the judgment
If a possession order has already been granted by the court, you may be able to ask the court to set it aside.
This is a legal process that requires a good reason, such as if you were not able to attend the hearing due to illness or other reasons beyond your control. If you feel you have a case, you can stop the repossession yourself by completing an N244 form.
You may also want to read our article on wrongful repossession and how to complain.
Seek legal advice
A solicitor who specialises in repossession cases can provide you with legal advice and represent you in court. They can also help you negotiate with your lender and explore options such as remortgaging or selling your home voluntarily.
Depending on which solicitor you use, there may legal costs associated with their services, but there are free legal aid orgnisations available, who may be happy to represent you while waiving legal fees.
Be wary of ‘fast cash’ house buyers
Some companies may offer to buy your home quickly for cash to help you avoid repossession. However, these companies may offer a low price for your home and take advantage of your situation.
It’s important to carefully consider any offers and seek independent legal advice before making a decision.
If I don’t own the house will it still be repossessed?
It would depend on whether the property was ever linked to you beyond just living in in the house. If it had been owned by you in some way previously then there could be a possibility of enforcement against the property.
On the other hand, if it was simply the house you just lived in and it was not linked to you then they cannot take the house to pay off your debt. If the house is at risk of repossession then they may need to take legal advice rather than debt advice.
How do I find out how much debt do I owe?
You will need to contact the HMRC or the Enforcement Agents anyway to find out what the debt is that you owe. They will tell you what debt you owe, what it is for, how much it is, what action have they taken to recover the debt.
From there it will either be correct or it will be incorrect and you will also know at what stage in the enforcement process they have reached. If you then want to dispute the debt you may wish to seek specialist advice.
What if I’m in debt to my mortgage lender and my circumstances change?
If you are in debt to a mortgage lender and your circumstances change (i.e you moved address), you must inform the HMRC / Enforcement Agents.
You can identify your new address and enforcement agents will not be instructed to call to recover money from you at a house that you do not live in. You may need to provide proof that you no longer live at the previous property.
Where can I get help improving my financial situation?
There is always help available for people in your situation, you do not need to live in fear. It’s probably best to seek the advice of an Independent Financial Adviser regarding your property.
However, you should seek help from a money advice agency who will be able to assess your full situation and advise you on the options available to deal with your debt. They will be able to negotiate with creditors on your behalf and make sure you are maximising your income.
You may also want to contact Legal Aid to see if you qualify for assistance. Shelter and CAB are also good charities to help you in your situation. You may also want to read our article on voluntary repossession.
