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How to stop a repossession

It will come as no surprise that 1.6 million households are worried about meeting their mortgage repayments. Add in the date of 31st July 2021 – when the mortgage holiday scheme is planned to end – an unsettled economic outlook and the scheduled end of furlough, and the coming months look set to really squeeze finances.

Although some 2.6 million mortgage holidays were approved between March and November 2020, the number of people in mortgage arrears is on the rise. It is predicted this could lead to a surge in home repossessions in 2021.

A Covid consequence: a temporary ban on house repossessions

Currently, home repossessions – the process of a mortgage lender securing a court order to take over the possession of a property – can’t be enforced until at least 1st April 2021, following a recent extension by the Financial Conduct Authority. This means that if you are in danger of your property being repossessed and a property reclaim is already in process, action will be paused until after this date. You should receive a reactivation notice to advise you when proceedings will restart.

If a possession order is already in place and you received a ‘notice of eviction’, however, your lender is not required to send a reactivation notice. The deadline may be delayed until after the ban has lifted, so contact the court or anyone acting on your behalf for clarification.

What leads to a house repossession?

A lender will consider two or three consecutively missed mortgage repayments a red flag, especially if you have a low credit score. A house repossession is not the first port of call for the lender. It is a costly and time-consuming process, so they should work with the borrower to agree a repayment plan as a first step.

A lender will only apply for a home repossession court order if repayments have not been forthcoming after negotiations and intervention. Even then, a judge can listen to the borrower’s side of the story in court and rule in their favour, especially if they can prove funds to clear missed payments. If this happens, the occupier can still be evicted if they fail to keep up with a subsequently agreed repayment plan or they withhold a one-off settlement payment.

How to stop heading for repossession of your property

If you are struggling financially due to the Coronavirus pandemic, contact your lender for early assistance. They may be able to offer help in one of three ways, depending on your circumstances: pause your repayments for a few months as part of the mortgage holiday initiative; give you up to three months grace when paying back accumulated mortgage arrears or switch you temporarily to an interest-only mortgage to reduce your monthly payments.

Mortgage lenders are also required to follow pre-action protocol, which prevents them starting court action in certain circumstances. Make sure you explore all avenues, such as whether you have mortgage payment protection insurance or can claim any benefits.

Why is it important to stop a repossession?

When a lender successfully applies to repossess your home, you are still responsible for the mortgage payments and all household bills until it is sold. If the lender is in control of the sale of your property, it may take time and debt will mount every day it is on the market. Stopping a repossession will avoid this situation altogether.

Also bear in mind that if you want to apply for a mortgage in the future, lenders will not look favourably on borrowers who have faced repossession proceedings in the past – to the degree of refusing to lend you a penny.

Alternatives to having your home repossessed

It’s not too late to stop an eviction, even if court action has already started. Provided you can make a reasonable offer to repay the arrears, a judge may choose to suspend the order. Additionally, homeowners can explore selling the property themselves to clear the debt, which is possible even if the lender has got an outright possession order or a warrant of possession.

Sell property fast to stop a repossession & reduce debt

Who you use to sell your property to stop your home being repossessed can impact how much further debt you build. When you sell to a professional cash buyer, such as the Open Property Group, you can access a super quick exchange and completion service that will prevent your debt from escalating.

In our case, it can take as little as 24 hours to exchange and less than a week to complete. You will also save money as there are no estate agent fees, solicitor fees or EPC fees when you sell to Open Property Group. We have successfully bought many homes that have been under the threat of repossession, alleviating worry, costs and stress for the homeowner.

Our process starts with an instant cash offer. Get the ball rolling by requesting a valuation and advice on avoiding a house repossession.

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