Repossession allows a lender to take over ownership of your home because a mortgage or other loan secured on your home hasn't been paid.
What is repossession?
When you buy a home using a mortgage, you own the property but your mortgage lender has a financial claim against it.
If you don't make all your mortgage payments in full, your lender can try to get their money back, along with any missed interest payments and fees.
To get back the money they loaned you, your lender may decide to take repossession action.
Only a court can decide if a lender can repossess your home. If you don't leave, only the court can decide if bailiffs can be sent to evict you.
When your lender takes control of your home, they sell the property and recover the money you owe and any costs that have built up.
Rules for repossession
Repossession should only happen as a last resort. It can only be done if your lender follows the correct legal process.
Your lender must follow rules to work with you to try to find a way for you to afford your mortgage and repay your arrears.
Why your home is repossessed
Your home can be repossessed by your main mortgage lender or by another lender who gave you a second mortgage or a loan secured on your home.
It is also possible to lose your home if:
- a bankruptcy order is made against you
- a local council or other public body makes a compulsory purchase order to buy your home
- you don't pay your ground rent or service charges to your freeholder or break other conditions of your lease
What causes repossession
Arrears build up if you don't pay your mortgage or second loan in full at the times your payments are due.
You may have problems paying your mortgage if there's a change in circumstances or income because of:
- redundancy or reduced hours at work
- sickness, accidents and disability
- divorce, separation or bereavement
- having or adopting children
- changes in your mortgage rate
How to delay repossession
Always open your letters from your mortgage lender or loan provider. Early action gives you more options and more time to find a solution to your problems.
As soon as possible, you should talk to your lender about mortgage arrears and get financial advice about your payment problems.
Find out more about ways to avoid repossession.
Explore options to keep your home
Repossession should be a last resort. It's important to explore all your options to avoid repossession.
There are many sources of help with money problems and legal advice when facing repossession.
Leaving your home and giving your keys back to your lender is called voluntary repossession.
Voluntary repossession is usually not a good option because you:
- have to keep paying the mortgage until the property is sold
- probably have to pay for somewhere else to live
- have to pay back the difference if the property is sold for less than you owe the lender
- may be less likely to get help from the council if you are homeless
If your lender takes you to court, make sure you attend the hearing. The repossession hearing is another opportunity to talk to your lender and your chance to explain your situation to the court.
The judge checks your lender has followed the rules to try to prevent repossession. These rules apply to you too.
Tell the court and your lender if you have had serious health or other problems that have prevented you from contacting your lender before.
Try to get legal advice about repossession before the court date. If you haven't, you might be able to get legal advice at the court on the day of the hearing.
Orders the court can make
The judge can make a court order that allows you to stay in your home while you deal with your mortgage arrears. You could be allowed to pay back your arrears over the rest of your mortgage term.
If the court orders you to leave your home, or you don't keep to the terms of a court order, your lender can ask the court for permission for bailiffs to evict you.
Get advice about what to do next. It's not too late to try to prevent repossession even at this late stage.
Use Shelter's directory to find a housing adviser
Eviction by bailiffs
Only court bailiffs can remove you from your home if you don't leave voluntarily after a court orders the repossession of your home.
Find out more about eviction by bailiffs.
Debts after repossession
After repossession, you may still have mortgage debts or other debts secured on your home.
If the sale of your home does not pay your debts in full, your lender will expect you to pay off your mortgage debts.
Finding a home after repossession
Get advice about finding a home after repossession.
In some situations, you may get help from the council if you are facing homelessness.
Tenants and repossession
You could also be affected by repossession if you rent your home.
If your landlord doesn't pay the mortgage, your landlord’s mortgage lender can repossess your home.
Last updated 02 Jan 2014 | © Shelter