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Stopping Repossession Proceedings
Practical Steps To Avoid A Repossession
An Overview Of The Main Options And Solutions Available Which Can Help Stop Repossession Proceedings
Most mortgage lenders will start repossession proceedings if a mortgage has more than three months of arrears and there has been no informal agreement to repay the arrears. According to The Council of Mortgage Lenders 1 in 30 mortgages are in arrears, with
1 in 100 mortgages with arrears of three months or more by 2007 - they have predicted an increase by up to 40% for 2008. That’s quite a lot homes at risk of being repossessed, of course not all of these homes result in a repossession and here we explain the options and solutions which can help you avoid a repossession which enable you to make an informed choice which will suit you the most, not just your bank!
Working out your options can be difficult, especially if your situation is changing, due to employment, re-location, family issues, etc. Therefore this information is intended as a guide and we recommend if you are unclear which option will suit you best you should seek independent advice.
Stopping The Repossession Process in 3 Simple Steps
Option 1 – Pay The Mortgage Arrears in Full
If you are able to, the quickest and most straight-forward way to stop the repossession process completely is to pay the outstanding arrears in full. If a banking error has caused the arrears and you can prove it was not your fault (for example you switched bank accounts) you should be able to claim bank any late payment charges.
Option 2 – Agree Terms to Pay The Arrears Over Time
If you are unable to pay the arrears in full, but are now able to continue with your usual mortgage payments plus some extra towards the arrears you owe. Most reputable mortgage lenders will give you chance to suggest a payment plan for the arrears you owe. Once this has been agreed they will usually ask for confirmation in writing. You should only agree to what you can afford as this is an informal payment plan, the lender is under no obligation to accept it and can at any time demand the full outstanding arrears in full.
Option 3 - Pay As Much Mortgage As You Can
If you can not afford to pay the arrears, and are struggling even to meet your usually monthly mortgage payment you should pay as much of your mortgage as you can afford. Remember to prioritise your debts – your mortgage and loans secured on your house should be your main priority. Talk to your mortgage lender and explain the situation. If you are likely to be able to resume normal payments you should give them a clear indication when this will happen. If you do not believe you will be able to resume normal mortgage payments within the next couple of months then it would be wise to consider the other options below.
Option 4 – Sell Your House and Buy Another Slightly Cheaper
This maybe an obvious solution, but if you have lived in your house for a long time it may not be a very welcome idea. If however the above options are not suitable then you should seriously consider this option. If your situation worsens and your house is repossessed it will be much harder for you to get another mortgage to buy a house. Remember, when your house is sold and your mortgage cleared the additional equity will be paid directly to you as a cash lump sum, which you could spend on your new home to ‘make it your own’. We can get you a quick cash sale which helps by stopping the repossession process.
Stopping The Repossession Process in 3 Simple Steps
Option 5 – Sell Your House and Rent It Back
This maybe a good compromise if you are reluctant to sell your house, but have exhausted all your other options available to stop a repossession. By agreeing a sale price and a rental price in advance with a property investor you can sell your house and continue to live there for as long as you want at the agreed monthly rental cost. This can often be less than your mortgage payments. This means you can clear your mortgage and any other debts, and depending on how much equity you have in your property you will receive a cash lump sum to spend as you wish. We have professional property investors in all areas of the UK who can buy your house quickly for cash and provide a rent back service.
Option 6 – Re-Mortgage or Release Equity
You may be able to lower your mortgage payments by re-mortgaging your property with an ‘interest-only mortgage’, or you could re-mortgage to release some equity which you can use to repay your outstanding arrears. A few words of caution – check you are not liable for any early repayment charges with your current mortgage lender, this can be thousands depending on how long you have had the mortgage. You should also be wary of any fees associated with your new mortgage, higher lending charges, and some other ‘admin’ charges can also amount to thousands. Seek professional financial advice, but remember most mortgage advisors work on commission.
Stopping The Repossession Process in 3 Simple Steps
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