For many homeowners in the UK, the threat of house repossession can understandably be a source of immense stress and worry. But what does house repossession entail? And why have you been threatened with it?
House repossession occurs when a mortgage borrower is unable to keep up with their mortgage repayments. This usually leads to the lender taking back possession of the property, which can be a stressful experience that leaves you feeling helpless and overwhelmed.
However, there are steps that can be taken to stop repossession and get back on track with your mortgage payments.
How much debt do you have?
What is house repossession?
House repossession occurs when a homeowner is unable to keep up with their mortgage repayments and the lender responds by taking possession of the property. Because mortgage debt is a priority debt, it should always be paid before other debts like overdrafts and credit cards.
The house repossession process usually follows a set procedure. For example, if a homeowner falls behind on their mortgage payments, the lender will likely apply to the court for a repossession order.
Once the possession order is granted, you will be instructed to leave your property. The lender will then be free to take possession of the property and sell it to recover the money owed. Handing back the keys for your property without arguing your case is sometimes called voluntary repossession.
House repossession can be a serious and distressing process to go through as a homeowner, but the good news is, you should have the opportunity to put things right and avoid repossession. Your mortgage lender might also agree to delay court action if you’ve applied for benefits, such as Universal Credit, but you’ve yet to receive your first payment.
Why do lenders begin repossession proceedings?
There are many reasons why a lender might begin repossession proceedings, but it usually happens after several missed mortgage payments.
Lenders will begin repossession proceedings if the borrower falls behind on their mortgage repayments and falls into arrears. This can arise due to many circumstances, such as:
- A sudden job loss or decrease in income
- An unexpected expense, like a home or car repair
- A drastic change in personal circumstances
- A relationship break-up
Lenders have a legal right to repossess the property if the borrower fails to keep up with the mortgage payments. When you originally sign a mortgage agreement, you agree that the property serves as collateral for the loan.
However, repossession is typically viewed as a last resort. In most cases, the mortgage lender or estate agents will try to work with you to find a solution to help you get back on track with your payments before resorting to such serious action.
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 the sale of your house in court. Instead, the decision to sell a property to recover a debt is based on a number of factors, such as:
- The total 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 over how to repay what they owe, the lender can apply to the court for a possession order. If the possession order is granted, the court will set a date for the property to be sold.
However, the decision to sell a property to recover a debt owed is determined on a case-by-case basis, and there is no set amount of debt or eligibility criteria that will trigger a sale.
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What is the house repossession process?
The property repossession process can be a complex and stressful experience, but it can help to know what to expect.
The general steps involved in the repossession process are as follows:
Falling behind on your mortgage payments
If you fall behind on your mortgage payments, your lender will contact you to try to find out why you’re struggling to pay and work with you to find a solution to help you get back on track.
The solution might be to negotiate a repayment plan, extend the mortgage term, re-evaluate your mortgage interest rate, or switch to an interest-only mortgage.
Follow-up from your mortgage company
Your lender will likely contact you a few times to try to get your repayments back on track. If you get a call or letter, it’s important not to ignore it. Even if you don’t think you can afford a payment plan, letting your lender know what you’re dealing with can help them determine your next steps.
Tell them what you can realistically afford to pay towards your mortgage, not just what you think they want to hear.
Confirmation of court date
If your lender still isn’t happy with the solution proposed, they will write to you to warn you that they are taking you to court. Once you’ve received the written warning, they can officially apply to the courts for a possession order.
Remember, don’t ignore a letter or phone call from your lender. Tell them that you want to work with them to resolve the backlog of missed mortgage payments and keep a record of all communication in case it does go to court.
Hearing in local county court
If you’ve been unsuccessful in trying to find a resolution and you’ve received a court summons, it’s crucial that you respond to the court to explain your circumstances. Failure to do so can lead to more serious consequences.
Depending on your circumstances surrounding your case and your level of cooperation, the judge could make several decisions on how to proceed.
What decision will the court make on my home repossession?
In repossession cases in the UK, the court has the power to make several different decisions depending on the specifics of the case. Some of the key decisions that the court may make include:
Suspended possession order
A suspended possession order 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 suspended order, you should be able to keep your home. However, if you breach the order, your lender can apply to the court for possession of the property and you’ll be asked to leave.
Outright possession order
An outright possession order is a court order that gives your lender the right to take action to repossess your property immediately.
Once the order has been granted by a judge, you will have to leave your home within a specified timeframe. In most cases, you’ll need to vacate the repossessed property within two weeks.
Order to adjourn
If you can present evidence to the judge that proves 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. This is known as an order to adjourn.
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 the decision given to you, you must seek advice immediately from a housing advisor, solicitor, or housing helpline.
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How to stop house repossession
If you have missed payments on your mortgage and you’re facing repossession, there are reasonable steps you can take to stop or delay repossession and protect your home. It’s important to act quickly.
Here are some tips to protect your home:
Get free advice on mortgage debt
There are a number of organisations that offer free debt advice if you’re experiencing financial difficulties or you’re on a low income and facing mortgage debt.
Organisations like Citizens Advice Bureau and National Debtline can provide you with information on your rights 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.
However, this is a legal process that requires a good reason (e.g. you were not able to attend the possession hearing due to illness or other reasons beyond your control). If you feel you have a case, you can stop repossession yourself by completing an N244 form and submitting it to the court.
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.
There may be legal and court costs required, but there are organisations that might be happy to represent you and potentially waive your legal fees if you meet certain affordability criteria.
Avoid ‘quick sale’ companies
Some companies claim to be able to buy your home quickly for cash to help you avoid repossession. However, these companies usually take advantage of your situation by offering a low price for your home.
It’s important to carefully consider any offers and seek independent legal advice before making a final decision.
Will the home I live in be repossessed if I’m not the legal owner?
If you’re not the legal owner of your home, it could still be repossessed if you have another link to it beyond simply living there (e.g. if it has been owned by you in some way previously) or if another occupier defaults on the mortgage.
Put simply, when a mortgage is in one person’s name only, they are solely liable for keeping up payments on the mortgage regardless of who occupies the property. Therefore, if the mortgage lender needs to take repossession action due to their non-payment, the property might be repossessed and you’ll be required to find alternative accommodation.
What will happen if I’m in debt to my mortgage lender when I move?
If you’re in mortgage arrears and you move to a new property, you must inform your mortgage lender of your new address as soon as possible.
It’s important to note that, just because you no longer live at the property tied to the mortgage debt, the debt won’t just disappear the second you move out.
The lender will continue to pursue payment from you and, in most cases, will escalate to legal action if you fail to respond to their communication. This might involve you being served with a County Court Judgment (CCJ), which is when the court orders you to repay the debt in full or in instalments.
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Where can you get help to improve your financial situation and avoid losing your home?
If you’re worried about mortgage debt, you don’t need to live in fear. There is always help available for people in your situation. Whether you’re already dealing with a repossession order or you’re just worried you might receive one, don’t hesitate to seek the advice of an independent financial advisor.
Alternatively, a money advice agency will be able to assess your full situation and advise you on the options available to deal with your debt. They can also able you negotiate with your creditors on your behalf and make sure you are maximising your income.
Finally, it might be a good idea to check if you qualify for any other forms of help or support, such as legal aid, and reach out to your local council for advice on what your next steps should be.
Conclusion
The house possession process can be a worrying time for a homeowner, especially if you were unaware that mortgage payments weren’t being made. But it’s important not to panic.
The most important piece of advice for anyone facing repossession is to cooperate with your mortgage lender at every opportunity. Even if you can’t afford to make up the missed payments, it’s always better to be open and upfront about your circumstances.
The court might agree to suspend or adjourn a possession order if you meet certain criteria (e.g. if you agree to make regular payments).
