Monday, 13 July 2009

Stressed and Repossessed

posted by debts.org at 04:44

What to do if you home is under threat of repossession

With home repossessions increasing, the Council of Mortgage lenders estimated that over 170,000 mortgages would be in arrears by the beginning of 2009.

If you are in arrears with your mortgage, the first thing to do is contact your mortgage provider as soon as possible. Present to them detailed statements of your income, spending and debts, and explain what you would like them to do for you. Never ignore calls or letters from your mortgage lender as the quicker you deal with the situation the quicker a solution can be found. Lenders have a range of options to deal with customers in difficulties, and you may be able to cut your monthly payments or even freeze them for a limited amount of time.

Where possible, contact your lender before you have any mortgage arrears, and explain that you are worried about not being able to pay next month´s mortgage. If you are in arrears, you could come to some arrangement with your bank or building society which allows you to add the arrears on to your mortgage agreement. You may also be offered an extended mortgage term so that your monthly payments are cheaper, although you will be paying them over a longer period of time. Too many houses are repossessed without homeowners looking into other options such as debt management plans and Individual Voluntary Arrangements.

Contact your lender or your house could be repossessed

If you are in arrears with your mortgage, your lender will write to you to ask you for payment. If you cannot meet this payment, your lender could take out a county court order against you. Even at this stage, you will not necessarily lose your home, and a repossession court order can be abandoned if a payment plan is agreed in the meantime. Having said that, don´t leave it until the last minute to try and arrange a payment plan with your lender. Your application for improved mortgage arrangements will be looked upon much more favourably if you contact your lender as soon as you default on your first payment. If a house is repossessed, and an eviction takes place, you must be informed of the date in advance.

Can I leave the house and leave the debt?

If you hand back the keys to the lender, and walk away from the house you could still be liable for costs and any shortfall on the mortgage after the house is sold. Many repossessed houses are sold at knock-down auction prices, and this may fall well short of the loan amount you originally borrowed. You may also be liable for any costs incurred by the lender in order to sell the property. Walking away is not necessarily an easy way out. A refinance mortgage may not help either, and the best way to get your finances in order is to contact debts.org for free advice.

How can I avoid house repossession?

More and more homeowners are using schemes to sell their properties then lease them back from the lenders to avoid repossession. Although you would then avoid the stress of eviction, you must be very cautious when accepting one of these deals. It´s not unheard of, for landlords to issue tenancy agreements for 6-12 months and then increase the rent so much, that you face losing your home anyway. Controls are in place to regulate mortgage lenders, and the way you are treated when in arrears, but not for sale-and-leaseback schemes. Avoid repossession and contact a debt specialist company who can advise you about Individual Voluntary Arrangements and Debt Management Plan.

Advice about home repossession

Last minute legal advice can be sought from the courts on the day of the repossession hearing, but this is little use to the homeowners who are trying to stave off repossession of their homes. Don´t leave things until the last minute. If you think you are getting into debt and have debt problems, The Consumer Credit Counselling Service, a debt advice organisation, has set up a dedicated help centre for people having trouble paying their mortgage. Shelter has a free housing advice line on 0800 800 4444 or you can contact your local Citizen´s Advice Bureau for help. Alternatively contact debts.org for free, friendly and professional help and advice.

Labels: council of mortgage lenders, lenders