Facing repossession is a horrible feeling, but is increasingly common in the current credit crunch. There are ways to delay or prevent repossession from happening no matter what financial situation exists. Carefully consider each solution as each one could potentially turn things around.
Prioritise Debts
There is no greater priority debt than paying the mortgage. Don't pay all the unsecured debts and focus any money available on making that payment. No judge in the land will allow repossession if the mortgage payment can be covered even if arrears exist.
Most other unsecured debts can be handled by a different debt solution strategy, such as a Debt Management Plan or Individual Voluntary Arrangement. These should be discussed with a debt counsellor.
Talk to The Lender To See If They Will Stop Repossession
If struggling to make repayments, talk to the lender and explain what has happened. It may be possible to delay or reduce payments or even switch to an interest-only mortgage. There is also a possibility that the arrears can be added to the outstanding mortgage.
Mortgage Protection Insurance To Cover The Mortgage
Check to see if a mortgage protection policy exists. Depending on the choice of policy, this could cover: unemployment, mortgage payments and long-term sickness. These types of cover usually last for 12 to 24 months and provide time to get things back under control.
Income Based Job Seekers Allowance - Claim For Mortgage Interest
If eligible for Income Support or Income Based Job Seekers Allowance, it may be able to get assistance with the payment of mortgage interest. For mortgages taken out prior to 1995 it is possible to get the interest paid on a mortgage of up to £100,000. If the mortgage was taken out after 1995, 39 weeks need to elapse before a claim can be submitted.
Sell and Rent Back to Stop Repossession In It's Tracks
Provided that there is a minimum of 25% equity in the property it may be possible to arrange a sell and rent back. This involves selling the family home to a cash buyer and then renting it back at a more affordable rate. It is possible for very late repossession cases to be stopped and assistance is normally provided to achieve this objective.
Unlawful Loan Agreement
If sold an adverse credit mortgage, ask a solicitor to look at whether the loan agreement is legal. If it isn't compensation or a complete write-off of the mortgage can happen. When a dispute is raised over the legality of a mortgage agreement the lender is unable to repossess a property until a legal outcome is reached.
No matter what happens, don't simply hand the keys over to the lender as they will sell the house at auction for a very poor rate. If repossession is becoming increasingly likely, talk to a solicitor or debt advisor as a matter of urgency. Explore some of the options eluded to above as they could easily turn things around.
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