Guide To Mortgage Arrears And Property Repossession
Keywords: mortgage arrears, repossession, real estate, remortgage, housing, finance, mortgage
People in todays society will have differing attitudes to debt and debt repayment. There will always be those individuals who take a very relaxed attitude to debt and debt repayment, however the vast majority will take the matter very seriously and in the case of property ownership, they will take any realistic action to make their mortgage repayments on time.
Unfortunately there will always be situations out of the control of even the most conscientious borrower.
Individuals fall into arrears on their mortgage for many different reasons; accident or sickness, redundancy or unemployment, death of a spouse, insolvency or hikes in mortgage interest rates to name just a few.
The most common reason for property repossession in current times can be attributed to general high levels of consumer debt. This comes in two forms, secured and unsecured debt.
Whether this is due to the borrower making payments on their unsecured debts in priority over their mortgage or a level of mortgage borrowing taken out which their income cannot afford.
But how can a few missed payments on the mortgage lead to property repossession?
Very rarely will a property be repossessed over an isolated incident of a couple of missed payments. The advice given to borrowers who fall behind on their mortgage repayments is to contact their lender at the earliest possible opportunity.
Speedy action on the part of the borrower can often reduce the potential arrears and put them on the road to recovery. Delaying action is likely to result in increased mortgage arrears and ultimately could lead to property repossession.
Borrowers have a number of options available to them in the early stages of mortgage arrears. These will include:
* Capitalising the arrears;
* Coming to an agreement with the lender to make good the missed payments over an agreed period of time. This is usually only a viable solution if the borrower can afford to increase the monthly mortgage payments;
* Paying the mortgage on an interest only basis for an agreed period. Of course this will only be an option open to those paying the mortgage on a repayment basis. This method is viewed as an immediate short term solution to relieve the immediate pressure as the arrears will still be outstanding;
* Increasing the term of the mortgage. This will take the effect of reducing the monthly payments, thus making them more affordable;
* Downsizing to a cheaper property. This could allow the borrower to use the cash raised to settle the arrears. This of course is not always a viable option as it is dependant on the seller finding a buyer for the property and so on;
* Surrendering an investment policy, such as an endowment or an ISA attached to the mortgage. Surrendering such policies will usually result in a significant loss to the investor as very rarely will he or she receive the full value of the policy. Consideration must then be given as to how the mortgage will be repaid at the end of the term with no repayment vehicle;
But what happens if an agreement with a lender cannot be made, or a solution found to clearing the arrears?
Handing back the keys to the lender is rarely a good idea.
The borrower will still be responsible for paying the mortgage until the lender has sold the property. This will lead to more arrears and arrears charges being made. It must also be understood that prices obtained for repossessed properties will usually less than the market value.
The lenders primary aim in this case is to sell the property as quickly as possible in order to recoup their funds.
If an arrangement is not made and the arrears situation escalates then it is highly likely that the lender will seek a legal remedy through the County Courts. The borrower will first be notified of this through a letter from the lenders solicitor.
In order for the lender to take possession of a property, it is first necessary to petition the County Court for a possession order.
The borrower will usually receive a court date for the hearing. Before the County Court will even consider granting a possession order it first has to be satisfied that every avenue has been explored by the lender and borrower.
The County Court will take the view that possession should be the very last resort. The County Court may take one of three course of action:
* It can grant an outright possession order. This will enable the lender to take possession of the property which will usually happen within 28 days;
* It can grant a suspended possession order. This will place an obligation on the borrower to make payments in accordance with the courts decision, with the suspended possession order enforceable if the borrower fails to keep up the repayments.
* It can adjourn the case until a later time.
Once a possession order has been granted the court will also decide a date on which this order is enforceable. The lender can then take steps to take possession of the property.
Once the lender has obtained vacant possession of the property, they will then follow there possession procedures which will include; changing the locks, disconnecting utility services, taking gas and electric meters and informing the local police of the possession.
Even after the property repossession, the borrower can still redeem the mortgage up until the point of sale. This can sometimes happen if the borrower has been organising a remortgage during this process.
In the event of the lender losing money on the proceeds of the sale, it may take further action if it believes the borrower has the financial means to make good the loss.
James Copper enjoys writing on areas of personal and commercial finance. He works for www.adderson.com
Previous Articles Highlighter:
Why Business Management Is Important For Online Businesses (1)
Do not stop in providing a product. You need to find a way to constantly have your customers come back to you, because they know they find with you all they need for your business.
Are You Allergic To A Man's Best Friend? (2)
Pet allergies are mostly genetic in nature, if someone in your family is allergic to pets there is a high probability that it could also happen to you as well as anyone in your immediate family.
It Pays To Know How To Spell On EBay (3)
Don't be daft Brian, I can hear you say! Can you really buy something on eBay, and then sell it back on eBay and make money? You certainly can.
Do You Lose Sleep Wondering If Your Home Is Safe? (4)
You will sleep the best you ever have with your home security camera looking out for you and your family. Charlie Welf writes about security system products for your home or business.
Selling Your Home: Some Of The Many Considerations (5)
However, if you do not have a choice, try to make the closing date at a time when you are able to move into your new home. This way you are not stuck without a place to live until the new home closes.
When To End An EBay Auction Early (6)
If you're going to close down your auction, it's preferable to do this quickly i.e. well before the auction's end point. eBay frown upon sellers who remove auctions near their conclusion simply because they want to try the auction again and see if they can get a better price next time.
How To Get The Credit Card You Want (7)
Then, be sure to look at how long you will get the 0% APR interest on the transfer, and find out if there is a fee or not. The interest rate on the credit card is another thing you definitely want to notice.
Which Type Of EBay Seller Are You? (8)
For Type fours, eBay is a means to an end, and that end isn't running thousands of auctions concurrently. The end is to create an internet business of which eBay is one element.
Don't Forget To Advertise On EBay (9)
If the buyer types "Nokia 8800" then only sellers B and C will have their auction page displayed in the results. If the buyer types in "Nokia 8800 camera", only seller C's auction will be returned.
Party Bingo (10)
Well, how about a game you may have forgotten about: B-I-N-G-O! Stop! I know what you're thinking because thats my job. You're thinking one of two things.
Newer Articles Highlighter:
Refinance Home Equity Loan - Cash In On The Value Of Your Home (1)
If you default on the payment for the home equity loan, you could lose everything you have worked so hard for. Many homeowners use the option of refinance in a home equity loan to consolidate all their bills.
Special Gear Considerations For Winter Backpacking (2)
If you follow the guidelines below you will find that you can dress warmly and still be comfortable. The key is that you dress for the elements. You need to consider the cold temperatures, the chilling wind and the snow.
Walking Shoes That Are Practical And Comfortable To Walk In Are Crucial To Our Feet (3)
But if they thought a little more carefully about the type of shoes they walked in before purchase, they wouldn't have such aches and pains in the first place. Footwear has indeed come a long way in recent years which means it's possible to not only have shoes that are practical to walk in, but fashionable too.
How To Buy A Home (4)
There are scores of pages of paperwork to be filled out and signed detailing the duties of buyer and seller; assigning, hiring, and evaluating the results of inspectors; detailing property condition and duties related to the condition (like repairing a crack in a wall); as well as much more.
Debt Management Vs. Bankruptcy (5)
When you enroll in a debt consolidation or debt settlement program, you are simply picking up the telephone and speaking with a credit counselor about your finances. If approved for a program, you will sign a contract and payments will be deducted from your bank account according to the agreement.
5 Tips On Spotting The Right Franchise Business Opportunity (6)
Whenever you travel from one place to another, you would see business opportunities which might interest you enough to set up your own in the place where you come from.
The History Of Mountain Biking (7)
Trail riders will hop and jump their bikes over obstacles, which requires an extreme amount of balance and concentration. Amazing Bikes is an informative resources site about bikes. Find out how Amazing Bikes can expand your horizons at www.amazingbikes.info
Franchising Your Business (8)
- It will expand your business horizons and networks Having a franchise will allow you to meet more people you wouldn't have otherwise met if you are confined to your main branch.
Installing Hardwood Floors - Want Some Tips? (9)
Either of these offers an excellent choice for the installation of engineered hardwood flooring. Glued down strip flooring is often considered superior investment for the price. This type of flooring is surprisingly easy to install.
Is Franchising For You? (10)
Are you willing to get tied up with franchisors' terms and conditions in running your business franchise? Business franchising does not give a lot of freedom when running your business franchised.
Permalink to Guide To Mortgage Arrears And Property Repossession