11 Ways to Stop Repossession in the UK
It’s not easy when you’re facing a house repossession. You’re likely to be stressed out and looking for any available options to keep your home. The sooner you act, the better. Here are 11 ways that can help you save your house if you’re facing repossession:
1. Contact Your Lender
Getting in touch with your lender should always be the first step if you’ve been having trouble making your mortgage payments. It’s important to realise that your lender doesn’t necessarily want to take your house. Repossession is an arduous process and during this process the lender won’t be getting any money. Explain your current financial situation to your lender and ask about what options are available. The lender may be able to work with you, allowing you to make lower payments for a period of time while you get back on your feet. Staying in touch with your lender on a regular basis is also a great way to make a personal connection so that the lender is is receptive to your situation in case you are defaulting.
2. Borrow Money to Pay Back your Lender
If your back is against the wall, services like TIC Finance can lend you money to pay off your lender. This works well as a short-term solution, particularly if you’re just waiting to sell off something to save your home. But do keep in mind that the interest rates are usually high and you have to pay back the loan on a schedule to avoid fees.
3. Check for Benefits
There are several different types of benefits that can help you pay your mortgage:
- Mortgage Payment Protection Insurance: This type of insurance kicks in when a default in mortgage payments happens due to certain types of unforeseeable events such as death, disability or job loss. If you happened to invest in such mortgage insurance at the time of taking the loan, then make sure you use the insurance and take advantage if you’re struggling financially.
- Jobseeker’s Allowance: If you’re actively looking for work, you should apply for a Jobseeker’s Allowance, which is a weekly amount you receive while job-hunting. The amount you receive depends on several factors, including your age, income and savings. A good thing about this allowance is that you can get it even if you’re working part-time for under 16 hours per week.
- Support for Mortgage Interest (SMI): If you’re receiving benefits related to your income, you could get assistance paying the interest on your mortgage through SMI. This only applies towards the interest on what you borrowed, and this is paid directly to your lender, but it still helps you pay off more of your mortgage.
- Mortgage Interest Run On: This is four weeks of money that you can receive if any of your other benefits are stopping because you’re going back to work, working more hours, or earning more money. This money is supposed to go towards your housing costs, and it helps ease the transition when you’re getting off benefits.
4. Build a Buffer
One practical way to minimise the impact of a missed payment is by paying extra when you can to create a buffer. In case you face any unexpected financial hardships, that buffer will keep you afloat and stop repossession. Even paying a small extra amount every month will add up to become substantial over a period of time and moreover, this will also leave a good impression on your lender.
5. Options from the Lender
Don’t assume that there’s nothing your lender can do to prevent your house repossession. The ideal solution for both you and your lender is that you find a way to continue making your payments, so you can keep your home and the lender can keep making money without worrying about repossessing and selling the house. Your lender may be able to reduce your payments for a stipulated period of time while extending the term of the loan, or come up with another solution.
6. Check your Budget
One of the biggest financial oversights you can make is to not keep a check on your budget. You need to know where your money is going every month to ensure that you have enough for all your bills and that you aren’t overspending on things you don’t need. Creating a budget doesn’t have to be hard work if you use an online budget planner like the one at the Money Advice Service.
7. Falling into Arrears
If you’ve missed any of your payments, your lender still has to give you a chance to pay off the arrears. The key is to be proactive and figure out a solution that you can present to your lender. Figure out how much you can pay back every month so that you can tell your lender how long it will take to pay off the debt.
8. Do Not Give the Keys
Think very carefully before you give the keys back to your lender and have them sell your house. If the lender doesn’t get what you owe for the house, then you’ll have to pay the difference, and the lender has six years after the sale to come after you for this. You’ll also end up on the mortgage repossession register, which makes it extremely difficult to get another mortgage in the future. Therefore, if at all possible, avoid giving the keys back to your lender. It’s preferable to handle the sale yourself so you have some say in how much you get for the home and so you don’t end up on the repossession register.
There are companies out there that will buy your home and then rent it back to you for a certain period of time. However, the FSA doesn’t regulate such companies, so be careful if you go this route. Also, you won’t own your home anymore, and it’s doubtful that you’ll get anything near what your home is worth.
10. If It Goes to Court
If your lender takes you to court, don’t panic. You’ll start by filling out a claim form and a defence form. The defence form is your chance to tell the judge your side of the story. You are likely to have three to eight weeks of notice before the hearing so you can prepare your defence. You can still come to a payment agreement with your lender during this time.
11. What Rights You Have in Front of the Bailiffs
You’ll get a 14 days’ notice or more from your lender before a bailiff can come to evict you, and the bailiff has to tell you the exact date and time. If you’re still there when the bailiff comes, you will be asked to leave. The bailiff can’t use violence or offensive language towards you or manhandle any of your belongings. The bailiff can’t remove your belongings without court approval, but if you don’t take those belongings, they’ll be locked in the house and you’ll have to set up a time with your lender to get them back. You may request the court to delay the bailiff, although, this will be granted only under specific circumstances.