What to do if you're being threatened with repossession
Being threatened with losing your home is understandably distressing, but it’s important not to ignore the problem and to seek early advice, as it may be possible to negotiate a solution.
Keep your mortgage lender in the loop
Missing mortgage repayments is never ideal, but lenders need to be sympathetic to personal problems, such as loss of earnings through redundancy or illness, that may cause you to be unable to meet your obligations. It is imperative to contact your lender as soon as possible after receiving a threat of repossession, instead of hoping that the problem will go away. It won’t.
Under financial regulations, lenders must follow a ‘pre-action protocol’, the purpose of which is to help you to keep your home by agreeing a way forward so that the lender receives payment and you avoid eviction. The onus is on you and the lender to stick to the terms of the protocol, so only enter into an agreement that you know you can afford.
Under the ‘pre-action protocol’, the lender must provide you with an exact breakdown of the amount of money you owe and the interest charges. You can ask the lender to alter the way that you pay your mortgage or to accept lower payments. While the lender is not obliged to accept your proposals, it must explain the reasons for this decision within ten working days.
In the event that you don’t keep to a repayment agreement, the lender must provide you with a written warning of court action at least 15 working days before.
Negotiate an affordable repayment schedule
If you can’t afford to make full repayments to your lender, you could consider negotiating more favourable terms. Options include asking for your mortgage term to be extended (to reduce your monthly payments) or lowering your payments by switching from a repayment to an interest only mortgage (if only for a short period while you regain your financial footing). However, it is important to consult with a debt advisor first before committing to making these changes.
Don’t go it alone
Fighting the threat of repossession alone is neither pleasant nor wise, so obtain free, impartial advice from a debt advice agency as soon as you are made aware of the danger of losing your home. Agencies such as StepChange, Citizens Advice and Shelter can assess your financial situation and advise on the most appropriate way forward to help you to remain in your home.
Attend any court hearings
In the event that you are summoned to attend court for a repossession hearing, don’t assume that your fight is over and loss of your home is inevitable.
Attending the hearing is essential or else the lender may be awarded possession of your home in your absence. You should arrive at the court fully prepared with a detailed breakdown of your income and expenditure so that the judge can assess your ability to repay the debt.
If you do not have legal representation, the court duty officer can assist you at no charge, so don’t be afraid to ask for help.
Remember, the court hearing is to hear evidence from both parties – you and the lender – and repossession is never ordered lightly. Therefore, make clear your intention to find a workable solution with the lender so that the judge can make an informed decision about how to help you to keep your home.