How many months mortgage arrears before repossession?
If you’re a homeowner with a mortgage, you’ll need to pay monthly payments to your mortgage lender…
If unexpected circumstances occur, and you begin to fall behind with your mortgage repayments, you may be wondering how many months mortgage arrears before repossession takes place. In this article we will explore the whole repossession process from initially falling behind with your mortgage payments to eventual the day of repossession. We will also consider options to delay and avoid a repossession from taking place.
What does being in arrears mean?
First and foremost, let’s look at what being in arrears means. It’s easy to assume that being in arrears means that someone has missed several monthly mortgage payments. Whilst that is in effect true, in reality you’re officially classed as being in arrears the very first time you miss a monthly payment, even if you’ve always paid on time before. Being in arrears means that you’ve missed a regular monthly mortgage re-payment, whether one, or many.
What can cause you to become in arrears?
Before a mortgage is agreed, you’ll go through stringent financial checks to ensure you will be able to meet the monthly repayments. They’ll check your employment status, savings, credit history, credit rating and other factors to ensure you’re a reliable candidate for a mortgage and will be able to afford to pay it off. But even the best laid plans can go awry and unexpected circumstances can occur which can derail your finances.
For example, your employment status may change, such as losing your job, changing jobs or having to take a pay cut, there may be changes in your relationship, such as getting divorced or splitting up with a partner, there may be a death in the family or you may experience illness or an accident. There are many factors involved in causing homeowners to become in arrears and what may have seemed affordable and easily achievable in the past, may sadly no longer be manageable on a monthly basis.
What happens if I miss a mortgage payment?
If it’s the first time you’ve ever missed a mortgage payment, the chances are that you won’t have the bank banging on your door the very next day. Most mortgage lenders have a 15-day grace period in place, which starts on the first day that your payment is overdue. They’re likely to leave it up to 15 days before contacting you to see what the problem is.
If you’re able to find the money before this and subsequently pay the outstanding mortgage arrears, then your lender may not contact you and everything will be okay.
How does property repossession work?
Mortgage lending companies are regulated by the Financial Conduct Authority (FCA). The FCA has rules called the Mortgage Conduct of Business (MCOB) which all companies have to follow.
They also have to abide by the Pre-Action Protocol for Mortgage Arrears, which involves various stages that need to be completed. As part of this, they’ll first have to formally let you know that you’re in arrears. Under the rules, your mortgage company are required to treat you fairly and consider any ideas or plans you have to resolve your financial issues.
Your property should not be repossessed until all reasonable attempts to sort out your situation, from both you and your mortgage company, have failed. In terms of how long this takes and how many months you can be in arrears before repossession occurs, there’s no set time period. It varies according to your individual circumstances and the attempts you’re making to rectify your debt.
To begin the repossession process, your mortgage lender will start court proceedings and apply for a possession order.
If the case goes to court, you will need to attend – not attending could put you at even more risk of eviction, as it implies you don’t care.
What are the likely outcomes of court proceedings?
If your mortgage company takes you to court due to mortgage arrears, property repossession is not the only outcome.
In some cases, your mortgage company may ask for a suspended possession order. This will allow you to stay in your home as you continue to pay off your arrears.
If either party needs more time to gather information or take action, the judge may decide to adjourn the case until a later date.
If the judge feels the mortgage lender has been unable to effectively prove that they should repossess your property, then the case may be dismissed.
In the worst case scenario, the judge may agree with your mortgage company and agree to an outright possession order. This means that on a date set by the court, your mortgage lender can take possession of your home and you will be evicted.
How can I avoid my house being repossessed?
In the first instance, you can avoid having to face the stress, worry and anxiety of having your home repossessed by keeping up with your mortgage repayments. It may be beneficial to keep a closer eye on your finances and manage all your expenditure more efficiently.
If you do find yourself in a tricky financial situation where you’ve missed a payment, you can avoid property repossession by working with your mortgage company to try and rectify the situation.
If this proves impossible, and your mortgage company is applying for a possession order, then it’s worth giving some serious thought to selling your house. Selling your house could avoid the need for you to go through court proceedings and be evicted. In these circumstances, you’ll need to sell quickly and there are companies, such as Molae Properties, who can help you achieve the quick sale you need.
Can I delay repossession of my house?
Property repossession doesn’t occur immediately and is only embarked on as a last resort if you’re unable to resolve your financial situation.
If court proceedings have been started, there are some circumstances in which your mortgage lender must consider stopping court action. For example:
- If you are in the process of selling your property
- If you are in the process of discussing a repayment plan with your mortgage company
- If you have a confirmed appointment with a debt advisor
- If your financial situation is likely to improve imminently
- If you are waiting to hear about a mortgage payment protection policy claim
- If you have a pending application for benefits, such as Support for Mortgage Interest
Under the terms of the pre-action protocol, your lender must consider stopping their court action if any of the above circumstances apply.
Are there any alternatives to repossession?
One of the best alternatives to property repossession is to sell your house. By selling your home quickly, you could pay off the months mortgage arrears that you owe and save the stress and worry of repossession.
By using a sell house quickly service, you don’t have to worry about estate agent fees or lengthy selling periods and will be given a cash quote for your property.
Do you need to make a quick house sale? Are you trying to avoid having your house repossessed?
Call us today to discuss the options available, or read How to Sell Your House Quickly.