Having a home repossessed can be an extremely stressful and upsetting experience. If you can no longer make mortgage repayments and are in arrears, the mortgage lender will start the process of repossessing the property to recover the money you owe.
How can you stop this happening without a lottery win?
Talk to Your Mortgage Lender
It’s important to note you won’t always lose your home if you’ve fallen behind with mortgage repayments. Repossession is a last resort for a lender. Resolving the issue is beneficial to all parties involved.
If you miss a payment, the lender will contact you to assess the situation and find out what your plans are for paying what you owe. Don’t avoid the call. Delaying the inevitable will just lead to things spiralling out of control, making a recovery much more difficult. Talk to your lender and explain the situation.
Together you can review your monthly income and outgoings, prioritise debts and agree a “repayment plan”. This plan will likely be for a fixed period — generally up to six months. During this time, the lender will accept reduced payments to help you get back on track.
Review Your Finances and Prioritise Spending
Many of us feel we are stretching every penny as far as it can go, but in truth, there are often spending cuts we can make.
List all monthly income and expenses, including a percentage of any bills paid annually such as the TV licence or car insurance. Seeing it all in black and white could highlight some unnecessary expenditure or areas where savings could be made — for example, by reducing subscription packages or switching provider.
Cutting out all “fun” spending may seem bleak, but remember, it’s only for a fixed period and it could make the difference between keeping and losing your home.
Seek Professional Advice
If your home is at risk of being repossessed, it’s unlikely you have spare cash to pay for expensive legal advice. However, there are a number of organisations that offer free advice.
The government organisation, Civil Legal Advice provides advice to those eligible for legal aid. There are also charities, such as Step Change, whose highly trained advisors offer free and impartial advice to people struggling with debt, including those facing repossession of their home.
Legal professionals can help you understand the repossession process and devise a plan of action.
Check Your Insurance Policies
Along with mortgage repayments, homeowners pay for various insurance policies to protect their home, it’s contents and themselves during periods of hardship. If you are struggling to pay the mortgage because you cannot work due to illness or injury, income protection insurance could replace your regular income.
Not everybody chooses to take out this type of insurance, but if you did and you’ve failed to notify the provider of your situation, it’s worth contacting them to see if the policy will pay out.
Contact the Local Benefits Agency
If you don’t have an insurance policy that can improve the situation, get in touch with the local benefits agency to find out if you’re eligible for any support.
There are various benefits available to homeowners forced out of work due to illness, injury or reduced hours. Support for Mortgage Interest (SMI) might help with interest payments if you’re eligible or a Reduced Earnings Allowance could boost your income enough to help with mortgage repayments. The Citizens Advice Bureau can provide free advice on the benefits available and your eligibility.
Sell Your House Fast
If your financial situation is not temporary and none of the above provides enough help to clear the mortgage arrears that have accrued nor ensured you can consistently make future payments, the best option is to sell your house fast.
A house buying service can provide a cash offer almost instantly and they won’t require reams of information. There are no legal, valuation or estate agent fees to pay and once a firm cash offer has been received and accepted, the funds can be in your account in as little as seven days. Provided you have equity in the property, you can use the proceeds of the sale to clear the mortgage arrears. The cash offer will be lower than the market value of the property, but you’ll avoid repossession and walk away with a sum of money.
The Bottom Line
Nobody wants to have their home repossessed, but if you’ve fallen on hard times and missed mortgage payments, the best thing to do is take action. Review your finances, look for opportunities to cut back, make savings and keep your home. Or accept that your new financial situation is unlikely to change and sell your house fast to clear the debt and keep some cash to make a fresh start.