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By Ben Kennish

How Many Months Mortgage Arrears before Repossession in the UK?

How Many Months Mortgage Arrears before Repossession in the UK?

Property repossession is one of the most frightening and humiliating things that can happen to a person. It can truly make someone feel alone, and can affect their mental and physical wellbeing.

But how does a person get to the stage of repossession? And how many months missed payments can make you liable to be taken to court for a repossession hearing?

Today, we’re going to be taking a look at how many months mortgage arrears can lead to a repossession hearing.

Does the Local Property Market Affect Repossession Numbers?

First off, we’re going to take a look at whether the local property market in your are really affects the number of repossessions that happen.

  • Regardless of whether or not you’re from an area that boasts a healthy property market, repossession can still happen.
  • Repossession can occur for many reasons – from debt to accidental missed payments – but it’s not in the bank or mortgage lender’s best interests to go forwards with it, so they will try to avoid it if possible.
  • The sooner you act, generally speaking, the less likely your home is to be repossessed.

Burying your head in the sand is the worst thing you can do, so it’s best to act as soon as you get into mortgage arrears. But how long is it until a repossession order can take place?

How Many Months Mortgage Arrears are there Before a Repossession order can be Placed?

So, if you’re in arrears, how many months’ worth of arrears does it take for the lender or bank to apply for a repossession hearing?

  • Taking out a mortgage makes you a “homeowner” to an extent, and arguably in name only. If you don’t keep up with your mortgage payments, then you can have your property taken away from you.
  • When someone takes out a mortgage on a property, they never do so with any sort of intention of getting into mortgage arrears. These things happen purely by circumstantial accident.
  • It happens for a range of reasons. People lose their jobs, they develop long term illnesses, go through divorces and so on. All of these circumstances can lead to a person being short on cash, and therefore being unable to regularly pay what they initially agreed to.
  • One missed or late monthly mortgage payment can put you into arrears.
  • Having any sort of arrears means that the bank or lender could take your home away from you with a repossession order in time.
  • However, repossession isn’t a quick process. Someone doesn’t turn up at your door the next morning and kick you out. There are numerous stages to it.

In fact, it can take several months for a repossession order to take place. In that time, you could be in proactive in prolonging the process, or even stopping it altogether.

Does it Begin with the First Missed Payment?

The repossession process inevitably begins with the first mortgage payment, but as we said, it’s a gradual process.

  • An assumption tends to be made by the lender or bank that once you’ve missed one mortgage payment, that the subsequent payments to come are unlikely to be paid also.
  • The more mortgage payments that you miss, the further you slip into arrears.
  • The catalyst for repossession, is without doubt the first missed payment. How you act following that will seal the fate on whether or not the property will actually be repossessed.
  • If straight after this first missed payment, you act and pay, then there’s likely to be no harm done.
  • Likewise, if you come to an agreement with your lender about how you’re going to pay off the one missed payment that you owe, they’re highly likely to pursue a repossession case also.
  • However, if you do nothing, then your lender or bank will continue to the next stage of the repossession process.
  • Generally speaking, through a repossession process, there are multiple arrears.
  • And yet, the vast majority of homeowners are in debt to their bank or lender. Most of us can’t afford to pay our mortgage outright and therefore have an outstanding balance.
  • This means that the bank or lender own a part of the property in question, until it’s paid in full. It’s your job to keep them happy by keeping up with your monthly repayments in full. You did sign a contract, after all. This is the only real way to avoid repossession risks altogether.
  • Even in the initial stages of arrears, your credit report will be affected.

This means that you’re likely to run into problems with borrowing in the future, even if your home being repossessed isn’t the outcome.

Is Repossession Good for the Banks?

If the banks repossess property, it must be in their favour, right?

  • It’s not actually in the favour of the bank or the lender to repossess your property. They’d actually far prefer you could pay.
  • Organisations such as FCA fully expect the banks to work with you in order to actively avoid having to reach for a repossession order.
  • Unfortunately, however, if you can’t afford to make payments and you don’t communicate with your lender, they’ll have no choice but to take repossession charges to the next stage.
  • It’s completely dependant on the bank or lender and your personal circumstances as to how many months’ arrears will lead to a repossession. Even paying a small amount will help in delaying the process.
  • If you are in arrears, however, there are a range of charities that you can contact, such as Shelter and Citizens Advice who will be able to provide you with help and guidance.
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Are There Any Rules that Lenders Have to Follow?

Before a repossession order is placed and taken to the next level, there are rules that lenders have to follow.

  • This is called the “pre-action protocol”, and before lender’s take you to court, by law they must follow this.
  • This protocol states that lenders can only take you to court as a last resort, and after they’ve tried alternative options.
  • Your lender has to treat you justly – and that’s a first and foremost. They also have to communicate clearly to you that you’ve missed a payment, and be willing to listen to and consider any proposals you have on how you’re going to pay and make things right.
  • It’s up to you to be concise in your response, and to reply to the lender in an acceptable amount of time. The worst thing you can possibly do is to ignore your lender. This will only speed up the overall repossession process.
  • If you lender takes you to court, then the overall decision of whether or not your home should be repossessed will be made by the judge.
  • Likewise, the judge will also decide how much repossession notice you’ll given. You then must leave the property by the date given by the court, otherwise you risk bailiffs and the police becoming involved.
  • If you’re already on benefits, you could look at applying for an SMI, which is also referred to as Support for Mortgage Interest.

If you’re found to be eligible for Support for Mortgage Interest, then the court proceedings cannot commence.

Things to Consider if You’re Worried About Arrears

Finally, here are just a few of the things you should consider if you’re worried about missed payments and getting into mortgage arrears:

  • The most important piece of advice here, would be to face the problem head on. Ignoring money troubles when it comes to mortgage repayments is literally the worst thing you can do.
  • The problem does not go away if you ignore it. In fact, it escalates in speed and gets far worse.
  • Remember that lenders don’t actually want to possess your home. It’s also in their best interest for you to make payments every month as you agreed. This is why it’s always worth talking to them first.
  • Confront the problem. Take action, and try to come to an agreement with your lender, such as extending the term of your mortgage for example. Remember that they will only contact the court in order to repossess your property if there are no other options.
  • Try and confront your arrears as soon as you possibly can. Even paying off a small amount is better than nothing at all. It shows the lender or bank that you’re willing to try and work alongside them in order to pay what you owe, and helps to rebuild their trust in you.
  • Remember, that if you ignore your arrears and leave the bank or lender with no other choice, then they will have to repossess you. That’s just how it works.
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On a finishing note: don’t delay, or the inevitable will happen. Reach out for help if you’re having trouble making you mortgage payments, and act fast. The quicker you confront the problem, the less chance you have of being repossessed – and repossession is the last thing any of us want. Even the banks and the lenders.

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2 Tallis St,
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ben@benkennish.co.uk

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