What is repossession?

Repossession is when your lender takes back your property because you haven’t kept up with your mortgage payments. It’s the last resort for lenders, and they can only do it if you’ve fallen behind on your payments by more than two months. If you’re at risk of repossession, your lender will usually contact you to try and agree on a repayment plan. If you can’t agree, they may start court proceedings.

What happens if you can’t pay your mortgage for one month?

If you miss a mortgage payment, your lender will usually give you 14 days to catch up. If you don’t, they may start taking legal action against you. This means they could start the repossession process.

First and foremost, stay in communication with your lender. If you’re honest about your financial difficulties and committed to resolving them, your lender will be more likely to work with you. They may even agree to change the date or method of payment. Do not pretend that everything is OK. The sooner you speak to your lender about the missed payment, the more options you will usually have.

In most situations, one month in mortgage arrears does not mean a huge problem, but you need to communicate with the lender and keep your end of the bargain. Remember that mortgage lenders and you have the same goal – you want to repay your mortgage as much as they want you to do it promptly.

From the legal point of view, it is their job to help you. If you ever have any doubts you can always refer to Mortgages and Home Finance: Conduct of Business Sourcebook

Please find the relevant excerpt below:

“A firm must when dealing with any customer in payment difficulties:

1. Make reasonable efforts to reach an agreement with a customer over the method of repaying any payment shortfall or sale shortfall, in the case of the former having regard to the desirability of agreeing with the customer an alternative to taking possession of the property;
2. Liaise, if the customer makes arrangements for this, with a third party source of advice regarding the payment shortfall or sale shortfall;
3. Allow a reasonable time over which the payment shortfall or sale shortfall should be repaid, having particular regard to the need to establish, where feasible, a payment plan which is practical in terms of the circumstances of the customer;
4. Grant, unless it has a good reason not to do so, a customer’s request for a change to (a) the date on which the payment is due (providing it is within the same payment period); or (b) the method by which payment is made; and give the customer a written explanation of its reasons if it refuses the request;
5. Where no reasonable payment arrangement can be made, allow the customer to remain in possession for a reasonable period to effect a sale; and
6. Not repossess the property unless all other reasonable attempts to resolve the position have failed.

 

As you can see from the above and especially point 6. repossession, even though not impossible, trusty is a last resort. If you’re not able to pay on the agreed day, let the lender know that this is the case.

Your stop repossession agenda – one month in mortgage arrears:

• contact your mortgage lender to discuss the problem

admit the financial difficulties and commit to resolving the situation

• take a close look at your financial situation and consider where you could cut back or make adjustments.
• think of plan B

What happens if you can’t pay your mortgage for two months?

If you’ve missed two mortgage payments, your lender will usually contact you to try and agree on a repayment plan. If you don’t make the agreed payments, they could start court proceedings against you.

This means they could start the repossession process. But, again as in the previous month it is in mortgage lenders’ interest to cooperate with you at every step.

If you can prove that you made every possible effort to catch up with all the missed payments, you still have a good chance to avoid repossession.

Pre-action protocol rules

A mortgage lender needs to follow a set of strict rules, called the pre-action protocol rules (you can read them all here) before they can start taking any legal action against you.

These rules are in place to ensure that both sides (the lender and the borrower) have tried their best to agree without going to court.

 

The lender must:

• send you a ‘notice of arrears’, which sets out how much you owe and what you need to do to catch up
• give you at least 30 days to get in touch and try to agree on a repayment plan. If, after this time, the lender doesn’t hear from you or thinks that you’re not trying to catch up, they can start court action
• send you a ‘letter before claim’ if the lender decides to start court action. This letter will set out how much you owe and what you need to do to stop the case from going any further
• send you guides from National Homelessness Advice Service, you can find them here

As we can see, even if you are two months behind on your mortgage, there are still options available to you to try and avoid repossession.

The most important thing is to stay in communication with your lender and try to agree. If you do this, you stand the best chance of avoiding repossession.

Postponing the start of a possession claim

There are some circumstances outlined in the pre-action protocol document that you must be aware of.

Please find a snippet below:

A lender must not consider starting a possession claim for mortgage arrears where the borrower can demonstrate to the lender that the borrower has:

• submitted a claim to – the Department for Works and Pensions for Support for Mortgage Interest or if appropriate Universal Credit; or an insurer under a mortgage payment protection policy; or a participating local authority for support under a Mortgage Rescue Scheme, or other means of homelessness prevention support provided by the local authority,
• and has provided all the evidence required to process a claim;
• a reasonable expectation of eligibility for payment from the DWP or from an insurer or support from the local authority or welfare or charitable organisation such as the Veterans Welfare Scheme or Royal British Legion;
• an ability to pay a mortgage instalment not covered by a claim to the DWP or the insurer in relation to a claim under paragraph 6.1(1)(a) or (b);

• difficulty in respect of affordability or another specific personal or financial difficulty, and requires time to seek free independent debt advice, or has a confirmed appointment with a debt adviser and
• a reasonable expectation, providing evidence where possible, of an improvement in their financial circumstances in the foreseeable future ( for example a new job or increased income from a lodger)

Your stop repossession agenda – two months in mortgage arrears

• contact your lender regularly
• make sure the mortgage lender follows all the rules
• read all the paperwork given by the lender and make sure you understand everything, if not do not be afraid to ask, it is important that you know your rights and responsibilities
• explore all the options in regards to an additional stream of revenue – can you get a new job? maybe you have a garage you could rent? or a loft storage space? All the extra steps are showing the lender that you are doing everything that it is in your power to avoid repossession of your home
• if you are in a position to make any even reduced payments – make this offer to your mortgage lender
• think of plan B

What happens if you can’t pay your mortgage for three months?

If you are in arrears for more than three months, your lender may start the process of taking your home from you.

It’s not a lost cause yet, you still have a good chance to avoid it, but your mortgage lender will start getting impatient and most likely you will receive a letter from County Court and a court date.

At this stage, you will have to go to court and give your defence.

You may be able to stop the repossession if you can prove to the court that:

– you can afford the repayments now

– Do you have a plan to catch up on the arrears

– you have a reasonable chance of being able to stick to the plan.

You must act quickly and seek a professional debt advisor as soon as possible

Several organisations can provide free and confidential debt advice, such as:

Citizens Advice, National Debtline, and StepChange Debt Charity, find more bellow.

Court hearing

The county court will send you a letter stating when and where you need to be. You must attend the court hearing. The letter will also state what you need to bring with you.

You must take:

– evidence of your income and expenditure

– a statement from your mortgage lender detailing you will be asked to make a ‘ controlled goods order’. It is a kind of inventory. It means that the court will take control of your belongings and you will not be able to sell them without the permission of the court.

– any paperwork you’ve been asked to bring with you

Most likely you will need to fill out a defence form, known as N11M. It is a written response to a mortgage lender’s claim.

The form is available to download from the gov.uk website.

You can also get help with completing the form from an experienced adviser. It’s a 7-page long form, most details are easily obtainable. You will have a chance to explain in your own words, what happened that you ended up facing repossession.

If you don’t go to the court hearing, the judge may order that your home is repossessed without giving you a chance to defend yourself.

If you want to try and keep your home, you should:

– get advice from an experienced adviser, there’s is a lot of advice available

– fill in and return the defence form

– go to the court hearing.

Court day tips:

• arrive early
• dress smartly
• have all the necessary documents will you
• put your phone on silent
• if its allowed bring a person that can support you
• bring some water or a snack
• have empty pockets, most courts have airport-like security at the entrance, and empty pockets will make the experience less stressful

Repossession hearing possible outcomes:

– The judge may adjourn the case, this means that the hearing is put off to another day so that you have more time to prepare or to get advice.

– The judge may make a ‘suspended possession order’. This gives you time to repay the mortgage arrears, plus the lender’s costs. The order will state how much you need to pay and when you need to make the payments

– The judge may make an ‘order for sale’. This means that your home will be sold and you will have to move out. The order will state when.

– The judge may make a ‘possession order’. This means that you have to leave your home by a certain date.

– The judge may dismiss the case. This means that the lender cannot take any further action to repossess your home.