How To Delay House Repossession

Friday, January 9th, 2009 at 0

The Council of Mortgage Lenders estimates that there will be 75,000 repossessions in the United Kingdom in 2009. Repossession can be a frightening prospect for many families who are struggling to keep on top of their mortgage repayments and other debts. Repossession should, however, be a lender’s last resort and so there are many other ways you can tackle your debt problems to avoid this outcome said Kiran Mistry a leading Insolvency Practitioner.

Deal with your lender

One of the most important steps you can take to stay in control of your home is to avoid burying your head in the sand and to keep in touch with your mortgage lender at all times. Lenders can offer a range of options to help struggling homeowners including repaying any arrears over a longer time period or even “capitalising” the arrears (adding them to the mortgage balance).

Your lender may also accept reduced payments, organise a payment holiday or change the structure of the mortgage (for example from a “repayment” to an “interest only” basis).

Government help

The Government has been quick to announce initiatives to help struggling homeowners avoid repossession. The Homeowner Mortgage Support Scheme is designed to help those who have suffered a sharp drop in income by allowing them to defer their mortgage interest payments for up to two years. This scheme is only offered through a small number of lenders and there are certain conditions attached.

Homeowners who are unemployed may also be eligible for Income Support for Mortgage Interest. Available after thirteen weeks of unemployment there are again conditions attached and a maximum mortgage limit of £200,000.

Take advice

There are many debt counselling experts available who can help you draw up a budget planner to determine what you can afford to pay towards your mortgages. Specialist turnaround consultants and debt specialists can help you prioritise and manage your debt in order to ensure that the most important outgoings (your mortgage) are maintained whereas less critical payments may be suspended until your financial situation improves.

Sell the property

One of the options available to families facing repossession is to sell the property. The best way is to do this through an estate agent on the open market but homeowners need to ensure that there is sufficient equity in the property to allow them to clear their debts.

There are many “sale and rent back” schemes now available by which companies will buy your home and allow you to remain living there by renting it back to you. Sale and rent back schemes are currently unregulated so it is worth trying to find a recommendation for a reputable firm in your area.

Attend hearings

If these steps have failed and court proceedings have begun it is important that you attend all the court hearings. Repossession should be a last resort and by making your case in front of a judge you may be able to delay or stop the repossession proceedings. If you can prove that you are able to make your basic mortgage payments then it is unlikely that a judge will grant a repossession order.

One important factor to remember when considering repossession is that simply handing in the keys will not solve your financial problems as you will remain liable for the debt in that situation.

Whilst repossession remains an unfortunate outcome for many families struggling with debt there are many steps that you can take to delay or avoid court proceedings. The main points to remember are to take specialist advice and to keep in contact with your lender at all times.