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Are house repossession levels dropping?
House repossession levels are guaranteed to increase in the coming months as the pause on repossession orders is due to end at the end of August. This means that repossession orders that started before the pandemic will now be able to go forward, making those numbers increase once again.
At the start of the coronavirus pandemic, the Government took several measures to try and protect the millions of people across the country affected. Along with furlough support for workers who were unable to continue working but in need of financial support, the Financial Conduct Authority decreed that homeowners and landlords were able to apply for a three-month holiday on their mortgages. This was extended for a further three months, and the Coronavirus Act was passed, pausing any repossession activity to give those who had lost their jobs some protection. With this help due to end in August, what will happen to repossession rates? We Buy Any House look into the facts and figures to give you the information you need if these acts were helping you during this difficult time.
Once these measures come to their end, we expect to see an increase in repossession. Over the last several months, mortgage orders for repossessions dropped by 96% thanks to the mortgage holidays. Landlord repossession orders fell by 89% as the Coronavirus Act prevented landlords from starting any eviction proceeding against their tenants, even if they were in arrears with their rent.
Even though there was a block on repossession orders, there are still records of 9 orders against UK homeowners, and 268 against landlords being applied and actioned. This is a huge drop from the previous numbers, but once the measures that are in place protecting homeowners and landlords end, these numbers will start to increase quickly.
How can I avoid repossession?
If you’re a homeowner or landlord that has been given some protection from the mortgage holiday and are concerned that you aren’t able to restart your regular payments, there are options for you. The best thing to do is to speak to your lender and see what support they can give you, as they may be able to extend the holiday for you. Another potential option is to look at an interest-only mortgage, or even to extend your mortgage term to lower your monthly payment. The worst thing you can do is ignore the problem, so if you think that you’re going to struggle to make these payments get ahead of the issue and start showing that you want to deal with it.
Lenders are being more flexible than ever with the pandemic striking, and so where possible, you should take advantage of that to help yourself long term. If you’re seen to be making a conscious effort to deal with your situation, lenders are much more likely to work with you and find a solution rather than looking to repossess. If you don’t take any steps to deal with your financial problems, and you don’t work with your lenders to try and come to some sort of agreement, you may find that they have no other choice than to resort to a repossession order. A repossession order can damage your credit score for years making it incredibly difficult to be approved for a mortgage on another house, which is why homeowners at risk of repossession will look for any other way to avoid it.
Can I sell my house to avoid being repossessed?
Homeowners that are facing repossession have got different options to try and avoid it. Because the repossession process is very long, there are several chances to come to an agreement with your lender. This could be by finding an amount that you’re both happy with to pay each month towards your mortgage, or by finding a way to pay your mortgage back in full, by selling the house. Homeowners that have equity in the house will often opt to do this when they don’t see their circumstances changing in the foreseeable future, which is especially true in the uncertain months that we’re facing. Selling your house, paying off the remainder of your mortgage and using the equity that you’ve unlocked to support yourself by either buying somewhere smaller or potentially renting until you’re in a better position to buy again down the line.
As of yet, the government have not announced an extension of the Coronavirus Act and the mortgage payment holidays, so it’s not expected for them to continue into September. If you’re relying on these support systems and are worried about what position you’ll be in when they finish, get in contact with your lender now and see what options they can offer you. It will depend on your relationship with your lender and what their policies are as to what help they’ll be able to offer you, but it’s worth asking about switching to an interest-only payment or looking to extend your mortgage holiday. Remember that while your lender is under no obligation to help you, it’s in their best interest, as a repossession order is a long and difficult process for them as well. You taking the initiative will work in your favour and should help you come to an agreement to keep you in your property.