Sometimes referred to as mortgage repossession, house repossession is where a lender takes possession of someone’s home due to failure to make their mortgage payments. In general, 2 months of defaulting is enough for lenders to take action, although some may try to reach an arrangement with you to clear arrears and hence avoid taking proceedings. Where a lender is not satisfied with the proposals for repayment or have serious concerns about the arrears, they can take control of the property and sell it off to recover what they’re owed. A homeowner can, however, stop repossession through a legal process.
What does the repossession process involve?
Repossession proceedings are typically preceded by payment reminders. The lender will write to you to request that you make payments and can also use a solicitor to demand for payment. If you fail to come to an agreement with them and commit to clear your arrears over time, the lender can repossess the property with your consent. If you don’t want your home repossessed, you must engage in a legal process before a County Court.
What is a suspended repossession?
At its most basic, a suspended repossession is a legal arrangement made between a homeowner and a mortgage lender following a court hearing. It means that the repossession order/process on your property has been suspended (put on hold) for a specified period of time. You are permitted to stay in your house provided you keep to the stipulated conditions.
The court normally suspends repossession if it views that the existing arrear issues can be resolved and also that the lender agrees to it. The majority of lenders often expect defaulters to pay back arrears within 3 years or so with the judge deciding what amount you will be paying back based on affordability and other financial commitments.
The suspension order is readily applied and gives you the chance to make payments and retain property. It also gives the mortgage lender security. Note that the order only maintains in place if you keep to the agreed terms. If you default on payment, the lender has the right to seek possession of your house.
What are the conditions of a suspended repossession?
Suspension typically has several strict terms & conditions attached to it and which you should adhere to. While the conditions are typically explained in a court order, you can seek professional advice if they are not very clear to you. They include:
- The homeowner agrees to pay in full their monthly mortgage payments and an additional amount towards the arrears they have incurred until they are up to date with payments.
- He or she aggress to sell the property in question within a certain period and repay the mortgage in full, plus all interest incurred as well as any payment arrears. In most cases, this is only accepted if you are able to show that there’s a ready buyer and you’re simply waiting for the sale process to complete’.
If you find that you have difficulty sticking to these conditions, make sure to inform your lender and where possible get professional advice immediately instead of remaining quite about your situation. The lender can evict you really quickly (sometimes without a second hearing) if you fail to live to your promises on the original agreement or else fail to agree to a favourable alternative. You can also go back to the County court and request that the amount is changed so it’s more affordable for you.
What not to do following a suspended repossession
If you’ve reached an agreement with your lender to pay back arrears every month, it’s important to avoid overstretching yourself and overpromising on what you are able to afford. You could soon find yourself back in that previous situation and face eviction again. If you have problems keeping up the agreed mortgage payments and paying extra for arrears, you should immediately notify the lender and court.
Note that while judges are often sympathetic to homeowners, there’s a probability that they might interpret failure to keep up payment as evidence that you cannot actually afford the mortgage (another reason why it’s important not to agree to make payments you cannot maintain).
What happens if I default under suspended repossession order?
If you don’t maintain payments due under the order, you risk being evicted from your property. The lender can apply to the court and ask for formal eviction without a second hearing and without any warning to you about their intentions. The assumption is that you must be well aware you have breached the conditions of the legal agreements and risk being evicted.
In some cases, the borrower can be notified by the court of a particular date when they must leave. You can avoid all these by opening up to your lender about your financial struggles. Together, you can work to reach an agreement that favours your situation. You can even do a quick sale before the eviction and pay off your arrears.
Can I sell my house following suspension of repossession?
Selling your house can be a good decision if you want the suspended repossession cancelled and embark on rebuilding your life as soon as possible. You can sell the property quickly and in turn pay off the mortgage in full as well as any other secured debts. Any cash left will go directly to you.
Thankfully, there are many professional cash property companies in the UK that facilitate the sale process and get you a ready buyer. The process can take a very short time period and can save you thousands of pounds as there are no estate agent fees incurred─ the sale is direct.
Does a suspended repossession solve financial problems?
While a suspended repossession is not a solution to financial struggles, some people are able to solve their own mortgage problems and get back on their feet. This often requires a lot of discipline and commitment. You need to make your payments on time. In addition, you must be able to afford the payments.
Unfortunately, not everyone is able to overcome financial difficulties with suspension of repossession. The majority of people who receive a suspension order already have problems keeping up with their monthly mortgage payments, plus other financial debts, if any.
And since, the agreement requires them to pay more to their lender in order to be up to date with their arrears; they might find themselves struggling even more. The higher payments mean a strain on the budget. It’s important to seek professional advice in order to make an informed decision.