The repossession of property isn’t the cheeriest of topics to think about, but it is important to be aware of the facts when it comes to repossessed property. If you own property and don’t keep up with your mortgage payments, repossession is a real threat.
When you agree to buy a property and take out a mortgage to cover the cost, it becomes your legal right to keep up with your monthly mortgage payments. Unfortunately, circumstances can change, due to illness, change in employment or divorce and debts can soon mount up. As soon as you miss just one mortgage payment, you’ll be in arrears and a bank aren’t normally interested in why – they just want that payment to be made.
If you’re in arrears on mortgage payments for 90 to 180 days, then your lender has the legal right to repossess your home. They’ll apply to a court for an “order of possession” and your beloved home will no longer be yours.
What happens to mortgage debt after a property is repossessed?
If your property is repossessed, your mortgage lender has a legal duty to sell the property for the best price that they can get. They’ll seek expert advice on how to price and value the property and the best way of selling it. It may be put on the general market for sale, or it might be deemed best to be sold at auction. Either way the focus is on selling the property as soon as possible to recoup the money owed. However, as we all know, the property market has a mind of its own and properties don’t always sell quickly, however much we wish they would.
Until the property is successfully sold, you will still be charged interest on your mortgage loan. Plus, you’ll be liable for paying the estate agent’s fees and any other costs involved in selling the property, such as legal costs and bills for repairs or maintenance.
If the sale of the property more than covers the amount you owe your mortgage lender, then any surplus funds will be returned to you and your debt will be cleared.
However, if the repossessed property sale fails to generate the full amount that you owe your mortgage lender, then you will have a shortfall debt. This means that you will still owe money to your mortgage lender, despite the sale of your repossessed property.
In the case of mortgage shortfall debt, you may also be charged interest on the amount owed, which can add up over time. Sometimes the debt is transferred to another company to pursue, and you can be pursued for up to 12 years to recover the mortgage shortfall debt.
The benefit of selling your property before it is repossessed
If you’re aware that you’re having money issues and your home could be at risk of being repossessed, don’t stick your head in the sand. It’s not a pleasant situation to be in, but you could make things slightly better for yourself if you take control before the courts do.
Once a court has made a repossession order on your property, it is out of your hands and you can’t do anything or sell the property yourself. So think practically and take control by contacting your mortgage lender before they take you to court and offer to sell your property.
If you’re in negative equity, you’ll need to get your lender’s permission to sell – they still might say no, but you can appeal to the court to give you time to try and sell and it at least shows that you’re doing something positive to try and help resolve the situation.
If you’re in London and need to sell your property quickly, without the hassle of using estate agents and traditional property selling methods, contact Molae Properties today on 020 3368 3331 or enter your postcode here for a free cash price, no obligation, offer.
The quick and easy property buying service specialises in buying properties in London and M25 corridor and can help if you need to sell your house quickly. There are no upfront costs or hidden charges and we can help you save your home from becoming repossessed property.
