How Many Mortgage Payments Can I Miss Before Facing Repossession?
Having your home repossessed is a horrible thought and it is something that nobody wants to face. It is therefore important to understand how many mortgage payments need to be missed before the repossession process starts. If you’ve missed your mortgage repayments and have payments overdue, then you are ‘in arrears’. If you are unable to agree a way of paying your arrears, your lender might ask a court for what is called a ‘possession order’. This enables them to sell your home and use the money from the sale to recover the money you owe.
Technically a mortgage goes into arrears on the first day you miss a payment. But some lenders offer an unofficial grace period of 15 days before they’ll even contact you about it.
Even then, repossession proceedings – more correctly known as a possession action – won’t begin immediately. Most lenders don’t want to repossess if they don’t have to and will only use repossession as a last resort. So, most lenders won’t even consider it as an option until you have missed three months’ worth of payments, although some lenders can postpone even further, after missing a payment for the third time.
What Is Involved In The Repossession Process?
There are generally 7 steps involved in the repossession process:
Step 1: Your lender contacts you about mortgage arrears.
They will ask how you plan to repay back any arrears and there is sometimes the option to enter into an affordable repayment plan with your lender. It is important to look into your income and outgoings to understand what you can afford to repay each month.
Step 2: Your lender starts court action
If you are still in arrears and unable to enter into a repayment plan, then your lender will eventually take court action against you. Although this is a last resort, lenders will not hesitate to start court proceedings if they believe that you are not going to be able to repay what you owe. Once court action does start, it is important to take legal advice as quickly as possible.
Step 3: The court sends you paperwork
You will receive several letters from the court, which will include a ‘claim and defence form’, which means that your lender has applied for a possession order. You will also receive a ‘notice of possession hearing’, which means that the court has arranged for a hearing for you to attend. It is very important to check these documents carefully so that you fully understand what is going on.
Step 4: You attend the possession hearing
If you are unable to reach an agreement with your lender, then a repossession hearing will be scheduled. It is vital that you attend this hearing because if you do not, then the court will most likely make an outright possession order and you could lose your home. You should inform the court as soon as possible if you cannot attend as you may be able to attend remotely via phone or video.
Step 5: The court makes a decision
There are two types of possession order; an outright order and a suspended order. An outright possession order is very serious as it sets a date for you to leave your home. This could be as little as 4 weeks after the hearing. If the judge does make an outright possession order, you may be able to get it set aside or changed to a suspended order. A suspended order allows you to stay in your home on the terms set out by the court. You have to pay a set amount on top of your monthly mortgage payment.
Step 6: Bailiffs come to evict you
If an outright order and the date for possession of your property has passed, or if a suspended order has passed and you break the terms of the order, then the lender can ask bailiffs to carry out an eviction. Your lender must apply for an eviction warrant from the court and must send a notice to your home to say that they have done this. You could be evicted 14 days after this notice unless you take action.
Step 7: Sale of your home by the lender
If an eviction takes place, then the mortgage lender will look to sell your home. The lender will look to sell at the best possible price but will also be interested in speed of sale in order to recover the outstanding debt as quickly as possible. If the property sells for more than you owe then you may be entitled to the sum above this minus any fees. If the property sells for less than what you own then you may have to pay off any mortgage shortfall.
For more information, please see our Understanding What Happens When Facing Repossession page.
How Can I Avoid My House Being Repossessed?
If you are unable to repay what you owe in arrears and you cannot agree a payment plan with your lender, then you can look to sell your property as quickly as possible to a cash buyer. The reason that a cash buyer is required is because a mortgage buyer would take too long to complete on the purchase of your house. It can typically take 6 to 12 months to find a mortgage buyer, go through the legal process, and complete on the actual sale.
When seeking a cash buyer for your property, there are basically two options – work with an estate agent to find an individual cash buyer who is usually an investor, or find a cash property buying company. For more information see our What Is A Cash Property Buyer page.
Serene Homes is an example of a leading property cash buying company in the UK. The company uses their own funding and can complete on a house purchase in as little as 7 days. This is vital if you are facing repossession because time is of the utmost importance. If you have been issued with a possession order, then Serene Homes can provide an offer letter to confirm that you have agreed to sell your property for cash above what is owed to the lender. A member of Serene Homes can help you calculate this, so it is important to get in touch as quickly as possible.
If you are facing eviction, then Serene Homes can step in and stop the eviction process. And as a property can be purchased in as little as 7 days it is possible to complete everything before you are evicted. This can provide a very desirable solution because as long as the agreed sale price to Serene Homes is above what you owe to the lender, then you will receive a cash sum above this amount allowing you to move on with your life having avoided legal proceedings started by your lender.
For more information, please see our How To Stop Repossession Of Your Home page.
Facing repossession of your home is a frightening prospect but there is a way to stop this from happening and actually receive a cash sum above what you owe. Contact Serene Homes today to stop repossession of your house.