Repossession is a last resort for lenders, but if you continually miss mortgage payments, you’ll risk losing your home. Can anything be done to stop repossession in Nottingham? Keep reading to find out.
What is home repossession?
Home repossession involves the mortgage lender legally taking ownership of a property. Although lenders would prefer not to repossess, house repossession affects thousands of people annually in the UK.
Amidst the cost of living crisis, there was a 9.5% increase in people falling behind on mortgage payments in the first quarter of 2023 (Bank of England). It resulted in repossession rates spiking by 50% on the previous quarter.
What happens when your home is repossessed?
When your house is repossessed the lender will have the legal right to evict you and sell the property.
However, the lender must treat you fairly during the process. The Financial Conduct Authority (FCA) regulates lenders to ensure they provide a duty of care to borrowers. Likewise, The Financial Ombudsman can provide legal assistance to people facing repossession.
As such, the lender will be expected to sell for the best possible price once they get a repossession order. To do this, they will usually hire estate agents to sell on the open market. If they cannot sell on the open market, the lender may explore other options like a cash house buyer or auction.
You will likely be entitled to some of the proceeds of the sale. How much you get may depend on your outstanding mortgage debt, legal fees, estate agent’s fees and maintenance costs. After these have been paid, you will receive whatever money is left.
Unfortunately, you may not receive anything if the sale doesn’t cover your debts and fees. In this case, you will still have outstanding debt unless the lender agrees to write it off.
After your house in Nottingham is repossessed, you will obviously no longer own a home and may still be in debt. But the consequences do not stop here. A history of repossession will appear on your credit report, and future lenders will be able to see this. They may be reluctant to give you another mortgage as they will view you as a high-risk borrower. If you’re deemed eligible for another mortgage, you may be limited to mortgages with high interest rates.
Also, your credit score will be impaired, making you less likely to get other loans and even rental agreements for several years. It’s common for people to experience emotional distress and strain on their relationships during repossession. All these things are best avoided by doing all you can to stop repossession.
How long does repossession take in Nottingham?
Every repossession case is different. Generally, the whole process can take anywhere from 6 weeks to 12 months. Remember that repossession is a last resort for lenders. Before they set the wheels in motion on repossession, you’ll have many opportunities to negotiate a solution like a repayment plan.
Communicate with your lender and try to find a solution with them. If you do not, the lender will have no choice other than take court action to initiate repossession. You will be sent court documents and asked to attend a hearing. If the court grants repossession, you will be evicted before the house is sold.
The new Mortgage Charter and repossession
There is some good news about repossession. In June 2023, the country’s biggest lenders agreed with the FCA and the Chancellor of the Exchequer to provide borrowers with a 12-month grace period before repossessing if they fall behind on mortgage payments. It is just one feature of the new Mortgage Charter designed to help borrowers in the current financial crisis. As of August 2023, 90% of the mortgage market has signed it.
Further, earlier this year, the FCA outlined guidance lenders must give borrowers struggling to pay their mortgages. The regulator expects lenders to exercise “forbearance” – in other words, to consider all reasonable requests for repayment plans.
While there is a real threat of repossession if you stop paying your mortgage, there’s a lot of legroom for homeowners to do all they can to keep their homes. So what exactly can you do to stop house repossession in Nottingham?
How to stop home repossession in Nottingham
Contact your lender as soon as you expect to miss a payment. It’s standard for lenders to administer a 15-day grace period in which to make a missed payment. Provided you pay it during that time, you will not incur a late fee or hamper your credit score.
If you believe you can no longer afford your mortgage at all, contact your lender and be honest about your situation. The FCA requires lenders to assist borrowers under financial strain due to redundancy, mental illness, injury and other serious circumstances. As part of the Mortgage Charter, lenders must offer tailored support and be open to discussing repayment plans.
Repayment plan
Your lender may be open to a repayment plan whereby you make more manageable payments until you can resume your ordinary mortgage payments. Lenders that have signed the Mortgage Charter must allow you to switch to interest-only or a longer mortgage term. Depending on your situation, they may offer other repayment options.
Mortgage payment holiday
While it’s at the lender’s discretion, you may be eligible for a mortgage payment holiday. There are pros and cons to this option. It will relieve pressure on you, but you’ll still accumulate interest on what you owe, making your mortgage more expensive in the long run.
Sell your house
From the lender’s perspective, the purpose of repossession is to sell the property so that they can recoup what you owe them. But if you voluntarily sell your house, you will avoid eviction and give yourself more control over the process. You may secure a better price and therefore walk away with more money after paying your debts. You also won’t have a repossession record hanging over your head.
A cash house buyer can speed up the sale process and provide extra support during this difficult time. We Buy Any Home is the UK’s most trusted cash house buyer and has experts in Nottingham repossession sales. No matter where you are in the process, we will step in and give you control of the sale. Get a free quote from us now, or you can call to speak with one of our friendly team members today.
Let your house
Your lender may allow you to let your house so you can pay your mortgage with rental income. Being a landlord comes with many responsibilities, but it could be a suitable short-term solution if you can move in with friends or family.
Of course, landlords aren’t immune to repossession if they don’t pay their mortgage. Ministry of Justice data shows that between October and December 2022, the number of landlords repossessed grew by 98% compared to the same period in the previous year.
If you’re a landlord that wants to avoid repossession in Nottingham, We Buy Any Home can help you. You can sell the property with us even if you have tenants. Our experts remove all the stress and guide you every step of the way.
Government support
The government’s Support for Mortgage Interest (SMI) scheme can help you pay the interest on the mortgage. Another tool worth researching is the Debt Respite Scheme which is for people who have fallen behind on their payments. As mentioned earlier, the Mortgage Charter is the latest government policy to ease pressure on borrowers. The new guidelines will delay repossession and give you more time to ensure that you keep your property.
