Home Repossession Process – How Does it Work?
Our fully inclusive guide on the process of home repossession, and how it works.
Home repossession is a bit of a taboo subject to say the least, right? It’s something that none of us really want to acknowledge as a real possibility, and it’s certainly something that none of us want to go through in our lifetime.
The truth of the matter is, however, that so long as you have a mortgage, you’re at risk of your home being repossessed if you happen to miss or default on any mortgage payments. Even if, at the time of taking the mortgage out, you’re in a healthy position financially, unfortunately nothing in life is certain, and circumstances can change.
This is why, when you look at it truthfully, just about anyone can be at risk of having their property repossessed, so we should never shy away from learning more about the process and its’ implications.
So what is the home repossession process, and how does it really work?
Read on for our fully inclusive guide on the overall process of home repossession, and how it actually works.
Why Might a Property Get Repossessed? Down to the Basics
Before delving right into the step by step process of property repossession, we think it’s important to give a little more information on the basics of property repossession, and why it might happen to an individual.
Did you know that at any one period in time, as many as 100,000 families spanning all the way across the UK who are at risk of losing their home because of missed mortgage payments? It’s far more common than you might think.
All it takes is one missed mortgage payment, and you’re technically in mortgage arrears immediately, which is the beginning of the home repossession process in the UK.
One thing you’ll probably be left wondering, is when is it too late to stop the mortgage repossession process taking place? We’re going to be covering the answer to that a little bit later on, as we go through the step – by – step process of property repossession in the UK.
Remember this though – your mortgage lender will only start the repossession process as a very last resort, as it’s not ideal for them either. Having this knowledge may help you to deal with the process more efficiently, believe it or not.
You should never, EVER ignore your mortgage lender if they get in touch with you about being behind on your mortgage payments. Ignoring them is the worst thing you can possibly do, because if anything this will actually speed up the repossession process.
Your mortgage secured on your home ultimately means that your lender is well within their rights to repossess your property, and get it sold quickly through an estate agent or even sell it through a we buy any house company.
In some cases, however, if you actually sit down and speak to your mortgage lender and explain your circumstances and reasons for not being able to pay in full, then you might actually be able to stop the repossession process in its’ tracks by agreeing to revised terms of payment.
The Basic Repossession Process, Step – by – Step
Next up, we’re not going to be going into full detail, but we’re going to be covering the basic repossession process step by step just below. We’ll be going into this in further detail later on.
- First of all, your mortgage lender will contact you – usually in written form – regarding your mortgage arrears. This will be triggered by you falling into arrears by missing a payment on your mortgage.
- If you don’t respond, or you can’t come to any sort of payment agreement, your mortgage lender will then apply to the court for the request of a repossession order.
- Once this has been approved, the court will write to you and give you notice of the hearing date of the repossession.
- The repossession case will then be heard in court by a judge.
- If granted, the court will then make an order for the repossession to take place.
- You’ll be given an assigned date and time by which to leave your home, and if you don’t comply to this, bailiffs will be sent to remove you from the property.
- Following this, it will be down to your mortgage lender to sell your home.
- Once the property is sold, your mortgage lender will then seek out the balance of any outstanding mortgage payments you owe them. If you’re lucky enough to be in some equity from the sale instead, they will then return this to you.
So, that’s a basic and non – detailed step – by – step of the repossession process. Now, we’re going to have a little look at all of these steps in a little bit more detail.
A Detailed Step – by – Step Guide to the Home Repossession Process in the UK
Okay, so now we’re going to be going over the same steps, but we’re going to be going into more depth about each step, what can possibly be done to prolong or even stop the repossession, and when.
STEP ONE: Your Mortgage Lender Writes to You About Mortgage Arrears
The first step towards repossession in the UK, will be that your mortgage lender will write to you regarding your mortgage arrears.
“Mortgage arrears” very simple refers to when someone falls behind on their mortgage payments. It quite literally only takes one missed mortgage payment for you to find yourself in mortgage arrears.
At this point, your mortgage lender must follow a strict set of rules on the ways in which they deal with your mortgage arrears. First off, they must contact you and ask you to sort the problem out, and this form of contact is usually by point of a letter which is sent to your home address.
If you choose not to respond to this first letter, ultimately ignoring it, then you will receive a secondary letter from your mortgage lender. They will then warn you – and must do this by law – that if you then don’t respond, they will start court action in order to repossess your home.
If you have made contact with them, and they do not agree with what you have proposed, they will write to you to confirm this.
At This Stage in the Process, Can I Stop my Home from Being Repossessed?
We would always strongly advise not to ignore your mortgage lender when they get in touch with you at this point in the process. It’s about the worst thing you can do.
If you do choose to ignore your mortgage lender, then this will only result in the repossession process speeding up.
You should take the time to look into your options and consider your situation. At this point, you should work out what deal you can put to your lender in order to resolve your mortgage arrears, so you can get back on track with making mortgage payments.
At this point in the process, you do have a chance of stopping the repossession from actually going forwards.
There are ways in which you can negotiate with your lender, and ultimately discuss whether or not you can make changes to your mortgage payments. Your options are usually as following:
- You could ask to take a mortgage repayment holiday.
- You could ask whether you can extend your mortgage term.
- You could request lower monthly payments on your mortgage.
- You could ask your mortgage lender whether they can capitalise your mortgage arrears. This basically means they’ll add them onto your mortgage balance.
In some cases, your mortgage lender may not get on board with this. If this happens, it could be worth considering switching to another mortgage lender.
Remember, however, that your credit report will also be likely to be damaged because of your mortgage arrears, which will make it more difficult for you to borrow from another mortgage lender.
The most important thing, is to communicate with your mortgage lender. You should make the upmost effort to negotiate with them, and to find a solution for your mortgage arrears issue.
STEP TWO: Your Mortgage Lender Applies to the Court for a Repossession Order
If you do choose to go down the slippery slope of ignoring your mortgage lender, or both of you can’t come to a viable agreement on payment arrangements, then it’s likely your mortgage lender will then go forwards and apply to the court for a repossession order.
They must apply to the court in order to be granted the repossession order. In doing this, they must provide proof of their reasoning as to why a judge should grant them a repossession order, and transfer them ownership of your home.
At this stage, you can seek help from certain organisations. These include:
- The National Debt Line.
- Citizen’s Advice.
- The Local Council.
The details of which can be found easily online.
Can I Stop my Home from Being Repossessed at this Point in the Process?
Very simply, the answer is yes, you can still stop your home from being repossessed at this stage. You should not give up this early on in the process!
For example, if up until now you have ignored the letters from your mortgage lender, then it’s not too late for you to choose to respond.
You should continue to try to correspond and reason with your lender. This will make you look better when you do come to stand in front of a judge in court – ignoring your lender completely will go against you in court. Trust us.
STEP THREE: The Court Writes to You to Give You Notice of the Hearing Date of Your Repossession
So, your lender will have applied through the courts for a repossession hearing. Once the court receives the application from the lender, they will then fix a date for the hearing in court. At this hearing, a judge will decide whether or not you get to keep your home.
The timescale of this will differ depending on your local council, and how busy your local court is at current. In many cases, courts are underfunded at current, so this can be an issue – but do NOT rely on this meaning the situation will be delayed. The situation is a ticking time bomb.
You will receive a copy of the claim form your lender sent into the court. This tends to include the information below:
- The time and date of the court hearing.
- Details on where the court is located.
- The reasons why your lender has requested the repossession of your home.
- A defence form, which you should complete and then return to the court.
Can I Stop my Home being Repossessed at this Point in the Process?
At this point in the process, the answer is still yes, there is chance you could stop the repossession process taking place in full.
Baring that in mind, it’s vitally important that you complete the defence form efficiently and return it back to the court in a good amount of time.
At this point, we would advise you to seek help / advice as soon as you possibly can. You should even seek help in how is best to complete the defence form, and to help you present yourself as best you can in the hearing.
In your response, you should be clear about the negotiations you’ve had with your lender thus far. If you do have any other ideas on how to stop the repossession, you should definitely be including these too.
STEP FOUR: The Judge will Hear the Repossession Order in Court
The next step, is the day in which your repossession hearing will be heard in court by a judge.
On this day, the judge will make a decision on whether or not the repossession will take place. Usually before and during the hearing, the judge will read all of the evidence from both parties – which is why it is SO important that you submit your defence form and respond to the court accordingly.
It’s likely that during the hearing, the judge will ask questions from both parties. They will also be sure to check whether or not your mortgage lender has followed the rules and guidelines and completed the correct procedure.
Once the evidence has been both read and heard by the judge, they will make their decision regarding the repossession.
What are the Possible Outcomes of the Judge’s Decision?
There are a few different outcomes which could come from the decision of the judge. These are as follows:
- The judge may rule that your home should be repossessed. If this is the case, then you’ll be given somewhere between 28 and 56 days in which to leave your home. If you don’t move out in this time frame, you’ll be evicted by bailiffs.
- The judge may rule a suspended possession order. In receiving a suspended possession order, you will be allowed to stay in your home so long as you follow guidelines that they have set.
- The case may be adjourned by the judge. During the hearing, the judge may request other information, either from yourself or the lender. Between the postponement of the hearing and the next court date, you or your lender may have certain things to do prior to appearing in court again.
- The judge may dismiss the case altogether, and therefore your lender will not be granted repossession of your home.
Can I Stop the Repossession Process at this Point?
Even at this point, you can potentially stop the repossession. Of course, if the case is dismissed, the repossession will be stopped altogether.
However when it comes to the other outcomes of the court hearing, what you can do to stop the repossession will vary. It will depend on the amount of time you’re given, and whether or not the lender has to provide further evidence.
Even if a repossession order has been ruled, it is possible to stop it, however this will require you acting quickly.
STEP FIVE: The Court will Make an Order for Your Home to be Repossessed
The first outcome we mentioned above, is the judge granting the order for your home to be repossessed.
You should always assume going into court, that this will be the outcome. This means that you are prepared for the worst case scenario – and if it doesn’t turn out that way, it’ll be a nice surprise.
As we mentioned above, in deciding to repossess your home, you are usually given between 28 and 56 days in order to leave your home.
At the end of the actual hearing, the judge will also make a decision on costs. If they grant repossession, usually they’ll make an order for you to pay the fees of the lender. These expenses will be added onto what you already owe your lender.
Can I Still Stop my Home from Being Repossessed at this Stage?
It is late in the process, but even now you could stop the repossession taking place if you act very quickly. You won’t have long, baring in mind you may only be given 28 days in order to leave the property.
If a suspended repossession order has been granted, then you will be allowed to stay in your home for the time being. In order to do this, you have to follow the guidelines set out by your mortgage lender.
In some cases, this order might include a clause that you have to pay your mortgage payments, as well as paying towards your arrears too.
STEP SIX: If You Don’t Leave Your Home at this Stage, Bailiffs Will Remove You
If the 28 days comes to an end, and you still don’t leave your home, then bailiffs will come and remove you. This is also the case if you don’t stick to a payment plan previously agreed in court. In either of these cases, your mortgage lender will have to apply for a bailiff’s warrant from the court.
If you refuse to leave when instructed by a bailiff, they will then involve the police.
When the bailiffs do arrive at your home, they are not allowed to use offensive language or physical violence in order to remove you. If you don’t leave voluntarily, however, it’s likely they’ll call the police.
STEP SEVEN: Your Home is Sold by Your Mortgage Lender
Once your property has been repossessed, it’ll be sold by your mortgage lender.
Usually, a repossessed home will be sold for less than the current market value of it, normally at around 25% less. Your home being sold for below the market value lessens the likelihood of you making any kind of profit on the sale following the repossession.
Until the property is actually successfully sold by your lender, remember that you are still considered as being responsible for paying the interest which is still owed on the loan.
STEP EIGHT: Your Mortgage Lender May Seek Any Outstanding Mortgage Balance from You
The eighth and final stage of home repossession happens if there is a shortfall of cash after the property has been sold. You might have to pay this to your lender.
Remember that if there is a surplus of funds after all of the expenses have been deducted etc, the money will be awarded to you.
Above all else, remember that burying your head in the sand is the WORST thing you can do. Ignoring the problem will not make the repossession go away, but instead will actually worsen the situation, and escalate the speed at which your home will be repossessed.
You should always be sure to have contact with your mortgage lender, and try to negotiate as early on in the process as you can. The sooner and more willing you are to do this, the less likely it is your home will be repossessed.
Remember, there are organisations above which can help also, so be sure to look these up if need be.
Thanks for reading!