How to Stop Repossession of House: Sell Home to Avoid Repo
Looking at how to stop house repossession, how the repossession of your home can affect you as the home owner and how the process works.
Alexandra Ventress ★ Digital Content Writer
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Falling into mortgage arrears and having your property repossessed is a situation that no one wants to find themselves in. It can leave you wondering exactly what your housing options are, how you can amend the situation, and whether or not you can stop house repossession.
In this blog post, we will be looking at how to stop the repossession of house, what the repossession process involves, and how we can help you sell fast and for free.
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How many missed mortgage payments before repossession UK?
If you miss a mortgage payment, there is no need to sell your home. It does not mean you will lose your home either. The majority of mortgage lenders will not begin the repossession process until you have missed at least three mortgage payments.
This is referred to as being in mortgage arrears. As soon as you miss a mortgage payment, you are technically in mortgage arrears. However, your lender must abide by the pre-action requirements and typically will not repossess your home unless it is a last resort.
In order to begin repossession proceedings your lender must first:
- give you clear information about how much you owe on your mortgagee as well as the terms of your agreement
- offer you alternative ways of paying your mortgage to avoid repossessing your property
- not take you to court if you are taking the reasonable advised steps to stick to your lending agreement
- give you debt advice
What is the house repossession process?
If you are wondering how to stop repossession of house, then you may first wish to get familiar with the legal process of repossession. Below we take a closer look at what the home repossession process involves:
The first stage of the repossession process is your mortgage lender will be in touch with you to make a plan with you to pay off your arrears. If you are concerned about missing a payment then you can reach out to your lender for advice, you do not need to wait for them to call you.
The majority of mortgage lenders will have signed the government’s mortgage charter which means that they have made an agreement not to evict people within a year of their first missed payment unless there are circumstances which can be classed as exceptional.
If you and your lender cannot agree on a repayment plan, then your lender may start court action to repossess your home. In order to start the eviction process, they must be able to provide a list of all missed payments, the total level of arrears and the outstanding mortgage debt before they apply to court.
The court will send you several letters and forms that must be kept together. It is a wise idea to purchase a file and keep any relevant documentation inside. Then you should check all documents carefully before completing and completing the defence form.
The next step is that you will attend a repossession hearing. If you are not present for this hearing then you will damage your chances of keeping a hold of your home significantly. This is because if you do not show up to the hearing, you run the risk of the court making an outright possession order on your property and you could lose your home as a result.
If you are unable to attend your hearing due to reasons beyond your control you should inform the court as soon as possible.
At the hearing, the court will make a decision about the repossession of your home. There are two types of possession orders that the court can grant. These are:
- an outright possession order
- a suspended possession order
If the court grants an outright order then that means they have set a date for you to leave your home. This has the potential to be as soon as 4 weeks after the hearing.
If the court grants you a suspended order then you will be allowed to stay in your home but on the terms set by the court. This will typically mean that you must pay back a set amount alongside your monthly mortgage payment.
It may also be a case that the lender’s claim may be dismissed or adjourned at the hearing.
In the event that the court makes a suspended repossession order and you break the terms of the agreement, or they grant an outright order and the date for possession has passed, they may ask the bailiffs to evict you. In order for this to happen, the lender must apply for an eviction warrant from the court, and they must send you a notice to inform you of this decision.
If you are evicted from your property, then your mortgage lender will sell your house. After the sale has gone through, any secured creditors and our mortgage lender will get their money back. If there is any money left over from the sale you will receive it. If you owe more than the property ends up selling for, then you may have to pay the mortgage shortfall back.
What happens when a repossessed house is sold?
If your lender is trying to repossess your some and has gotten to the stage where they have taken legal action and evicted you, then the next step will be to sell your home. After the sale is complete and your lender has sold your property, they will:
- Deduct any legal and estate agent’s fees
- Take the money they are owed from the proceeds
- Repay any other lenders in the event that your property has been used as security for a loan
- Send any money that is left over to you
If there is a mortgage shortfall, then you will have to pay the difference. A mortgage shortfall occurs when you owe more than you can get from selling the property. Your lender may take you to court to repay this shortfall.
If you do not repay this debt and go on to purchase a new property, then your previous lender may apply to the courts for powers to force you to repay the original shortfall.
Do all repossessed houses go to auction?
The most popular outlet for repossessed properties is often a property auction. This is because lenders will wish to recoup their losses as quickly and securely as possible, which a property auction allows them to do. Rather than selling on the open market, lenders tend to favour property auctions as the winning bid becomes legally binding when the gavel falls. This means any investors who purchase the property cannot pull out of the sale without facing serious financial repercussions.
How long does it take for a repossessed house to be sold?
Exactly how long it will take for your repossessed property to sell depends on the condition of your property, the location, the selling method and market conditions. Many lenders wish to be rid of repossessed properties quickly, so they can recoup their losses faster. Typically, repossessed houses can be sold and have the sale completed in a month if they are sold through a property auction.
If they are sold through an estate agent, they can take slightly longer to sell, due to the different methods of sale involved.
How to avoid repossession
If you are looking at trying to avoid repossession house, there are steps that you can take. The best thing you can do if you have fallen into mortgage arrears or are worried about paying your mortgage is to contact your lender. Whilst it can be tempting to bury your head in the sand, you should always reach out to your mortgage provider. It is within your lender’s best interest to keep you in your home and paying your mortgage, so by informing them of your situation as soon as possible, you will be able to resolve the issue faster. Your lender will be able to help to provide you with a new strategy for paying your mortgage, or they may suggest a mortgage holiday or paying your mortgage a few days late if you are suffering from temporary financial struggles.
You should also look at seeking financial independent advice. There are plenty of housing charities which are there to offer free, impartial support to those who are struggling financially. Charities such as Shelter can help you with housing advice, but it is also worth getting in touch with Citizens Advice as well.
Can I have my home repossessed voluntarily?
It is possible to do what is called voluntary repossession. It involves handing back your keys to your lender if you cannot afford to pay back your mortgage arrears. However, if you hand back your keys and move out, you will not be able to live in your home. Furthermore, it can affect your:
- benefits
- options if you need housing help
- credit rating
How quickly can i sell my house to avoid repossession?
In order to avoid repossession, you should look into selling your home as quickly as possible. This gives you the best chance to sell your property within the allotted time and to raise the funds necessary to pay off your mortgage. Exactly how quickly you can sell your house to avoid repo is down to the selling route you wish to explore.
If you sell through a cash buyer, then you have the potential to sell in a timeline that suits you, meaning you could get your property sold in as little as 7 days, however, it is worth bearing in mind that you will not get the full market value of your property for this price.
If you sell through a property auction, you can sell and complete within a month, but it is worth bearing in mind that once you sell you will be required to pay a commission to the auction house.
If you sell through The Property Selling Company, we can help you sell your home fast and for free in as little as 28 days.
Can I sell my house before it gets repossessed?
Whilst a repossession order may seem final, there are still steps you can take to try and stop your order. You can always try and renegotiate with your lender in order to see if a new strategy can be reached.
If you feel as though you will be unable to pay off your debt, or that you will be unable to meet the ongoing repayment obligations then you may be able to request more time to sell the property so you may clear the debt.
In order to stop the repossession of your home, you will be required to provide your lender with proof that a sale is in progress.
If you are looking to stop repossession of your home and sell your house fast, there are typically three ways you can go about doing this. You can either sell through a quick house sale company, through a property auction, or on the open market. As with any selling option, there are pros and cons involved with these three selling routes. Below we take a closer look at how quickly you can sell your property using these options:
Cash Buyer
Selling through a cash buyer is an avenue that some people looking to stop house repo may wish to explore. A cash buyer is a person or company who is able to purchase your property without the need for a loan or mortgage meaning they are able to purchase your property in a timescale that suits you. Some cash buyers have been known to complete in as little as 7 days, making it an avenue some sellers use to stop repossession.
However, in return for this fast sale, you will not get full market value. And if you are reliant on the money from this house sale to help settle your debts are help you avoid a mortgage shortfall, then you will be unable to afford less than market value. Furthermore, not all sell house fast are as reputable as they appear. Some have been known to use underhanded tricks to pressure sellers, so it is always wise to ensure they are regulated by a board such as The Property Ombudsman or the National Association of Home Buyers.
Property Auction
A property auction is another route that people facing repossession may wish to look into. This is because a property auction offers a secure way of selling your property as once the gavel falls all winning bids become legally binding.
However, you should bear in mind that whilst all bids are legally binding, there is no guarantee of a sale. You may also find that there is a lot of waiting involved in the property selling process which if you are seeking a quick sale is not ideal. Furthermore, you will be required to pay a commission once your property has sold to cover the costs of marketing and selling your home.
Sell through us
Selling a house to avoid repossession can be a tricky situation to deal with, but it doesn’t need to be. Here at The Property Selling Company, we pride ourselves on our philosophy that selling a house should be three things: fast, effortless, and free.
We have made it our mission to shake up the way that you sell your home, which is why we offer a full online estate agency service but without the fees and hassle. Rather than forking out for expensive legal and estate agent fees, we cover them for you. It’s just one of the ways that we take the stress out of selling.
Our dedicated team of property experts work alongside you through every step of the selling process and beyond and can help you sell and avoid repossession house in as little as 28 days.
So, if you are ready to stop house repossession, then get in touch today and fill in one of our free, no-obligation valuation forms today!
