What a lot of homeowners don’t know is that repossession is a long process with several steps, each of which allows you to get back on track. Whilst officially the first day you miss your mortgage payment puts you in arrears, lenders will tend you give you a 15-day grace period to make the payment. Even after those 15 days, you do still have time to get back on track. Most lenders don’t want to repossess as it’s a much bigger effort on their part than just giving you a bit of time to get your payments sorted. Usually, lenders won’t start repossession proceedings until you’ve missed 3 months of payments, so there’s plenty of time for you to catch up.
Next steps for Repossession
You won’t immediately get kicked out of your house, there is a protocol that lenders have to follow. This protocol makes sure that you’re fully aware of what is happening, and gives you time to get your payments under control.
Standardly, lenders will send a series of letters, which each tend to have a 15-day deadline to respond. You must respond to these letters as soon as you can. If you ignore them, things will only get worse, so you want to make sure you’re being as proactive as you can be to get your finances in line and arrange with your lender to start your payments again.
If you’re aware that you’re going to struggle to make your mortgage payments for whatever reason, it’s best to contact your lender straight away and let them know that you’re trying to get the issue under control and often, showing this kind of responsibility will encourage them to give you more flexibility than someone who hides from the debt building.
If you do not contact your lender and try to organise some sort of arrangement, or you cannot reach a compromise, your lender will apply for a court order. At this point, you can still make payments towards the debt or fully pay off your arrears which can halt the process.
What happens in court for property repossession?
Although you’ve been taken to court by your lender, there isn’t a guaranteed outcome of repossession. You’ll be given the chance to present your argument to a judge as to why your house shouldn’t be possessed, and how you intend to pay the debt off. If you reach this point, it’s best to find some sort of legal advice to give you the best chance possible.
If despite your best efforts, you lose the case and the judge rules that the house be repossessed, you still have time to find somewhere else to live. The court has to give 28 days before a possession order is actioned, and this can be extended up to 56 days in different circumstances. At this point you are still able to keep the house; if you can agree with your lender a repayment plan they can get the possession order changed or cancelled in court.
Whilst these proceedings can take nearly nine months from the first missed payment to the house being repossessed, you should take action immediately as the sooner you act the sooner things could be over and done with. With repossessions, some homeowners accept that no matter how much they try to adapt their budget they are unable to pay the arrears off and maintain the monthly mortgage payments afterwards. In this case, often selling the house, using the proceeds to pay off the debt and then finding somewhere smaller or cheaper is a favourable option, making life long-term easier.