Everyday Blog

For any homeowner, the threat of repossession is a real worry. Many people live day to day earning enough to meet their bills. Then something changes, and all of a sudden mortgage payments start to be missed. When payments are missed, your account with your lender is said to be “in arrears”. Often after two or three missed payments, lenders will start to take action with the intention of regaining ownership of the property and sell it in order to recover the debt.

Just because you have gone into arrears and your lender is threatening court action doesn’t mean you will lose your home. Often a solution can be found that is acceptable to the lender and you. Selling your property, refinancing it with the existing or another lender, or finding the money to pay off the arrears are just some of the possibilities.

Talking to your lender is the first step you should take, before looking at other options. Your lender may be able to provide some solutions to help you resolve the situation and bring your account up to date. This may include switching your mortgage to interest only, extending the mortgage term or putting a new payment plan in place. Whether your lender can help or not, it is important to be able to show a judge you have made efforts to communicate.

Assuming you do have to go to court, then its worth noting that although serious, its far less formal than you may think. Possession hearings are held in the county court and are in private rooms. The lender is likely to be represented by a legal clerk. You, the lender and the judge will all be seated at a table and generally hearings only last ten minutes. Its your opportunity to explain what’s happened and aim to reach agreement on clearing the debt so you can keep your home.

The best solution at a hearing is to come up with the arrears. This clears your account and removes any need for the lender to seek possession of your property. Alternatively, if you can show that you can meet future monthly payments and pay a sum towards the arrears each month, then the judge may grant a suspended possession order. This means you can stay in your home provided you meet this commitment each month. If you decide to refinance or sell your home, the judge is only likely to grant extra time if you can show that your chosen option has been progressed and can be finalised in 28 days.

Refinancing your home may be an option worth considering. However, in a repossession situation time is of the essence and the broker may not have any control over timescales or being able to guarantee you will be able to get the refinance you need. The fact that you are in arrears will also limit the availability of finance to you and the long term cost is likely to be very high. Selling your home is a further option but again beware that you will have very little control over the timescales and it may take time for an offer to be made and for the buyer to get the finance they need to buy your property.

A suspended possession order may be granted at the court hearing by the judge. This will allow you to stay in your home provided you adhere to any terms that the judge has stipulated. For example, this may be to make full monthly payments in future together with a small contribution towards arrears. The judge may also suspended the order to allow you to follow through with any other proposal you have e.g. refinancing your home or selling it. If you fail to convince the judge to suspend or waive the order then the lender will be granted possession and you’ll have a matter of a few weeks before eviction.

Repossession is a worrying time, but the key is to get as much information and advice as possible. There are a variety of voluntary and charitable organisations available to you free of charge to guide you through the process, answer your questions and discuss your options with you. Such organisations include your local Citizens Advice Bureau, Shelter and National Debtline.