Options to avoid repossession of your home
Coronavirus update
From 31 October lenders can start court action for repossession again.
However the Financial Conduct Authority (FCA) has told lenders they cannot ask bailiffs to evict you until after 31 January 2021.
How to stop repossession
To stop repossession of your home you need to:
keep talking to your lender
try to improve your financial situation
work out a repayment plan
Lenders make money out of mortgages. They want to come to an agreement where you can resume payments instead of repossessing your home.
You have time to improve your situation and your lender must follow certain rules before they can start court action.
If court action has started, you can still speak to your lender and try to come to an agreement.
Speak to a debt adviser
You should get expert advice as soon as possible. A debt adviser can help you:
decide on the best option
find ways to improve your finances
make a financial statement
work out a repayment plan
Talk to your lender
Contact your lender as soon as you miss a mortgage payment.
Explain:
why you’re in arrears
that you’re making effort to clear the arrears
that you will send them a repayment proposal soon
You can start talking to your lender at any point even if they’ve started court action. The sooner you contact them the better your chances of keeping your home.
Payment holidays because of coronavirus
You can ask your lender for a 3 month payment holiday if you're struggling to pay because of coronavirus.
The missed payments will be added to the amount you owe for your mortgage. It's likely your monthly mortgage payment will go up after the payment holiday ends.
Check first if you have insurance that will cover your mortgage payments. For example, mortgage payment protection insurance or through your current account.
Pay as much as you can
If you can’t pay your full monthly instalment it's better to pay something.
Small regular payments can:
show that you’re reliable
help to build trust with your lender
show you’re trying to manage your budget
show that you’re prioritising your mortgage
Improve your financial situation
Take steps to deal with your mortgage arrears by:
looking at your income and outgoings
prioritising your mortgage and other debts
coming up with an affordable repayment plan
Think about selling your home
Selling your home could cover the costs of your mortgage and your arrears. If you are likely to have money left after the sale this could be an option to think about.
If you can't afford a repayment plan you could think about an assisted voluntary sale.
Don’t choose voluntary repossession
Voluntary repossession is when you leave your home and give your keys back to your lender.
In almost all situations it is a bad idea to choose voluntary repossession. Voluntary repossession does not clear your mortgage payments or your arrears.
Voluntary repossession still affects your credit rating.
You will continue to be liable for:
monthly mortgage payments
repayment of the arrears
other costs such as building insurance
You will also have to pay your lender’s costs for selling the property.
The council may well decide that you're intentionally homeless if you hand the keys back to your lender when you have nowhere else to live.
Last updated: 20 November 2020