How to avoid repossession - even if you can't pay your mortgage
Filed under: Mortgages, Property
Mortgage borrowers who fall behind with their mortgage payments should still be treated fairly by lenders such as banks and building societies, according to City watchdog the Financial Services Authority (FSA).It wants to introduce new rules to protect homeowners in this position, although the potential changes are only at proposal stage and mortgage lenders argue that their plans go too far.
Missing mortgage payments does not have to end in repossession, though.
Read on to find out how to ensure you keep hold of your hard-earned home, even if you are struggling to meet your mortgage commitments.
And recent figures show that a property somewhere in the UK is repossessed every 10 minutes.
The recession has obviously exacerbated the problem, but many of the homes being lost due to non-payment of mortgage could have been saved from repossession if the owners had dealt with their money issues head on.
The FSA wants to ensure that repossession is a last resort and that borrowers in arrears are not levied unfair charges.
Lesley Titcomb of the FSA said: "Lenders need to be in no doubt of their obligations to customers who fall behind with payments, and must realise that such circumstances are not an opportunity to create further profits."
But perhaps the best way to ensure that you do not lose your home, or incur penalty fees, is to contact your lender as soon as you realise that you are going to struggle to make a repayment.
It is after all also in their interests to keep you in the property and paying off your loan.
Statistics from the CML show that most of those falling into arrears on their mortgage do so due to a change in circumstances – such as the loss of a job or an illness that prevents them from working.
If you can forsee an issue, such as the end of a contract, or a pre-planned operation, it is therefore be a good idea to contact your bank or building society before you become unable to meet your repayments.
Lenders are always more willing to listen if you contact them before the situation becomes critical – as this approach gives both you and them more options to play with.
The various options that your lender may offer you in such a situation include a short-term reduction in monthly payments and the chance to cut payments by remortgaging over a longer period. It may also suggest selling the property and moving to a less expensive one.
If you are struggling, or believe that you are likely to in the near future, it is also a good idea to draw up a debt plan as this will enable you to work out what regular payment, however small, you can afford to make to your lender to cover both the arrears and on-going mortgage costs. Debt charities such as the CCCS or National Debtline will be able to help you with this.
You should then write to your mortgage lender as soon as possible to negotiate an affordable repayment arrangement.
If, however, your mortgage lender has already contacted you about repossessing your home, the most important thing is to stay calm and seek professional advice.
Finally, never just hand back the keys to your mortgage lender and walk away unless you've sold the property or there is a court order to evict you, as you will remain responsible for mortgage payments and other charges such as buildings insurance until the property is sold.
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Reader Comments (Page 1 of 1)
2-02-2010 @ 5:37PM
repossession help said...
I am sad with the thought that every 10 minutes a property is being repossessed here in UK. I agree with you. Not paying the mortgage should not always end in repossession.
http://winwinsale.co.uk
Reply