After repossession your lender can sell your home to pay off your debt. The sale price might not cover all you owe.
How the mortgage lender sells the property
After your home is repossessed, the mortgage lender decides when and how the property is sold.
Your lender can put the property on the market with estate agents or sell it at auction.
The sale process can take some time. Your lender should not delay a sale because house prices are rising.
If you think the lender is delaying the sale, you can apply to the court for an order telling the lender to sell the property.
Get legal advice if you need to take court action.
Use the Law Society directory to find legal help in your area.
Sale price for the property
The amount the lender sells your home for might not be as much as you would get if you sold it yourself.
Your lender has a legal responsibility to sell the property for the best price they can reasonably get.
Complain to your lender if you think they did not do this. If you are not happy with their response you can complain to the Financial Services Ombudsman.
After the sale
Your lender uses the money from the sale to repay what you owe. This includes:
- what is outstanding on your mortgage, including any interest
- the lender's legal costs
- estate agent or auction house commission fees
- bills for repairs and maintenance
Any money left is used to pay off any other debts that you have secured against your home, for example a second mortgage.
Any money left over after paying these debts is yours.
If the sale price doesn't cover mortgage arrears
After your property has been sold, there might not be enough to clear what you owe to the lender.
This could happen if:
- your arrears are very large
- you are in negative equity
You are responsible for repaying any amounts you still owe.
If the sale price doesn't cover your mortgage arrears the lender can take steps to recover what you owe. If the lender sells your debt to another company, you owe them the money instead.
If you took out mortgage indemnity insurance when you arranged your mortgage, the insurance protects the lender not you. If the insurance company makes a payout to your mortgage lender to cover a shortfall, they will probably ask you to repay them.
If you have a second mortgage or secured loan
If you have more than one mortgage or loan secured on your home, each lender has the same rights to apply to court to repossess your home.
If your home is repossessed, any money from the sale must be used to repay the first lender. The second lender only gets paid from any money left over.
A second lender may be less likely to take you to court for repossession if there won't be enough money from the sale to cover everything you owe.
The second lender doesn't have to get permission from your first lender to apply for a possession order.
Find out more about arrears on second mortgages and secured loans.
Mortgage payments after repossession
You don't have to pay any more instalments on your mortgage after a court decides that your home can be repossessed.
You are charged interest on what you owe until your home is sold.
Try to make an arrangement with your lender to make some payments towards your debt. Your total debt will increase if you don't make payments.
Responsibility for repairs and maintenance
After repossession, your lender must take proper care of the property until it is sold.
Your lender must:
- deal with essential repairs such as leaking pipes
- carry out basic maintenance work, such as mowing the lawn
Your lender can charge you for the cost of repair and maintenance work. This is usually added to what you owe.
Selling your home before repossession
You can't sell the property after the court has made a repossession order.
If you want to sell your home, contact your lender before you're taken to court. Ask for time to sell your home yourself.
You might be able to sell your home for a better price than your lender can.
You must get the lender's permission to sell if you are in negative equity.
If your lender refuses permission and you have a genuine prospect of selling the property, ask the court to give you time to do this. The courts may be willing to make an order allowing you time to sell the property yourself.
Contact a solicitor for further advice about selling the property yourself.
Use the Law Society Directory to find legal help in your area.
Last updated 20 Dec 2016 | © Shelter
If you need to talk to someone, we’ll do our best to help