Months before repossession2023-09-07T09:26:16+00:00

Mortgage Payment Arrears: How Long Do You Have?

If you have fallen behind on mortgage payments, you will likely be concerned about how many months in arrears you have before your home is repossessed.

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Mortgage Arrears: How Long Do You Have?

As homeowners with mortgages know, financial problems and the non-payment of monthly loan instalments usually lead to unsettling and severe consequences. Sooner or later, if the mortgage continues unpaid, the threat of possession proceedings looms on the horizon. However, the repossession of property is not immediate; the process for repossession can take several months.

If you are concerned about finances and your home, help may be at hand. Also, please read on as below, we explain how long repossession for mortgage arrears typically takes.

Houses

What Does Arrears Mean?

Technically, loan payments – including those for mortgages on residential properties – are overdue or in arrears from the day after a missed payment. Nevertheless, some lenders allow a grace period of up to fifteen days before contacting the borrower(s) concerned. For some people, this unofficial concession might be enough to get around temporary, one-off cash flow issues. In contrast, if the financial problem is more serious, a two-week breathing space is unlikely to resolve the outstanding amount.

How Many Months Before Repossession?

In most cases, three months of missed payments are a trigger point, but the delay can be longer.

Lenders are usually entitled to take action from the outset, but many of them see possession proceedings (repossession) as a last resort. In other words, banks, building societies and other mortgage finance providers do not usually want to initiate legal action unless they have to.

What Happens Next?

If and when a lender decides to initiate action, a protocol for mortgage arrears applies. Lenders have to follow an approved procedure and keep the mortgagor i.e. the borrower(s) fully informed. Additionally, the bank, building society or mortgage house must provide an opportunity to put the situation right before any repossession action starts.

Nowadays, lenders do not knock on the door at the outset. Typically, a sequence of standard letters warns of the situation and the possibility of action. In accordance with the accepted standards, borrowers have a fortnight to respond to such communications. Eventually, however, if the arrears remain uncleared, the lender will likely warn that they intend to apply to the relevant county court for a possession order.

If you have received a possession order, call us now on 0800 298 0571 or read our guide: How to appeal your repossession.

Pre-empting Repossession

For some people who run into spells of financial difficulty, even after adjusting the household budget, it is simply not possible to meet payments and clear the arrears. In such cases, one could approach the lender first. Being proactive and making contact in this way tends to create a favourable impression; lenders probably perceive such borrowers as more responsible and committed than those who ignore the signs of difficulty. All the same, before going to the office for an appointment, it is necessary to have a realistic plan.

You might wish to consult the gov.uk site. Help is available from the legal aid scheme and Civil Legal Advice for those who are eligible, or freely from:

  • Citizens Advice.
  • National Debtline.
  • Shelter.
  • Your local council.

Ways You Can Repay Your Mortgage Arrears

If you are forced to miss a mortgage payment you should get in contact with your lender. Usually, you can work out a way to get your mortgage paid by adjusting your monthly payments.

Pre-empting Repossession

For some people who run into spells of financial difficulty, even after adjusting the household budget, it is simply not possible to meet payments and clear the arrears. In such cases, one could approach the lender first. Being proactive and making contact in this way tends to create a favourable impression; lenders probably perceive such borrowers as more responsible and committed than those who ignore the signs of difficulty. All the same, before going to the office for an appointment, it is necessary to have a realistic plan.

You might wish to consult the gov.uk site. Help is available from the legal aid scheme and Civil Legal Advice for those who are eligible, or freely from:

  • Citizens Advice.
  • National Debtline.
  • Shelter.
  • Your local council.

Missed Mortgage Payments

If you miss a payment of £300 for example you can always contact your lender and pay back a lump sum on a later date for the usual monthly fee plus the money in arrears. Alternatively, you can add an extra £100 to your next three months of mortgage payments. In both these situations, you will need to get this agreed upon with your lender.

Part Payments

If possible, offer the lender a part-payment and suggest an affordable level of regular repayments. Notably, they must allow time to claim government or mortgage interest support and provide an option to reschedule the payments under the terms of the protocol.

Pension and Endowment Policy

Both your pension and endowment policy can be used to pay off your arrears. If you are over the age of 55 and have a personal or company pension. You can cash in 100% of your pension as a lump sum to reduce or pay off your mortgage – up to 25% Tax-Free. However, this is not possible if you are currently paying into your pension or receiving money from it before cashing it for mortgage payments.

Never Too Late to Make a Payment

Notably, it could still take months for the case to reach court and a possession hearing. Significantly, it is never too late to make a payment or reach a possible agreement with the mortgage provider. Such initiatives could delay the process, move it back a step or two – or even halt it completely.

You Could Consider Selling the Property

Finally, depending on your housing needs, you could consider selling the property. If circumstances permit, even if it seems unpalatable initially, this option could be attractive in the long term. Experience has shown that houses sold by owner-occupiers tend to realise higher selling prices than repossessed properties when lenders take charge of the process.

How to Stop Repossession

Make sure you talk to your lender

1. Don’t take emergency finance

Other companies may have misled you into believing that a bridging loan or short-term finance is your best or even only choice. That’s not true. The temporary relief will be short-lived when you are facing repossession for a much higher sum.

Try not panic and stay calm

2. Don’t accept a quick sale

In desperate situations, you may be tempted to accept a below-market-value “instant cash” offer on your home. Avoid quick sale companies at all costs—they profit from your misfortune. We can provide better options.

 Review household expenditure

3. Get us to help

We can help you navigate through your options. We will force your lender to give you time to make a decision that suits you. Our first step is to assess affordability for you to keep the property long-term. If this is not an option, then we will ensure you speak to regulated finance professionals or have time to sell your property on the open market.

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