If you get behind with your mortgage payments, the most important piece of advice is to contact your lender immediately. Ignoring the problem won’t make it go away and in fact will only make it worse in the long term. Even if you can’t make the full payment, it’s much better to give a partial repayment rather than nothing at all.
When contacting your lender, you should explain why you’re in arrears, and what efforts you’re making to catch up on the missed or delayed repayments. If your problem is more serious (such as a job loss), you’ll be able to explore your options more fully. One possibility could be to sell your home while you have the choice. What you finally decide will depend on what kind of mortgage you have, how much you owe and the reasons for non-payment. If your financial difficulties are temporary, a loan from an FCA authorised lender like Cashfloat might be sufficient to get you back on your feet again until your circumstances change for the better.
Mortgage lenders must follow pre-action protocol rules. This includes a notice of default within a month of the first missed payment and a calling up notice within 2 months. This should set out key information in detail such as the dates/sums of missed repayments.
What happens with a repossession?
Repossession is a possibility, but you should realise that this is an action of last resort for lenders. If you receive notification of a repossession, you can write a holding letter, setting out your arrangements for clearing the debt. On receipt of this letter, your lender has 10 days to reply accepting your suggested way to clear the debt, offer an alternative proposal or start repossession proceedings.
At this point, even though you may feel under enormous stress and feel that you need to escape from the situation, it’s never a good idea to just move out, hand the keys back to the lender and walk away. This action (also known as voluntary repossession) is misguided as you’ll continue to owe mortgage repayments (with all the associated fees and extra interest) until the property is sold.
If you’re notified that the lender is starting repossession proceedings, you should make sure that you seek legal advice. In this way, you can explore your options with the guidance of an expert. You should also make sure that you attend the hearing with legal representation.
The court decision could be an outright or suspended possession order; a time order (usually for second mortgages), or they could adjourn or dismiss the case. Your attendance at the court hearing gives you the opportunity to present your side. Although an outright eviction is usually for 28 days, in certain circumstances (such as ill health), the court will be more lenient and give you an extra month before setting the eviction date. This will give you the time to arrange the move and find alternative accommodation.