Options to avoid repossession of your home

Find out about the options you can take that could help you keep your home, even if your lender has started legal action for repossession

Get expert advice

If your home is being repossessed, find a legal adviser.

Contact a Shelter adviser online or by phone

Talk to your lender

Your lender has to follow pre-action protocol rules. This means that taking you to court to repossess your home should be a last resort.

You can talk to your lender about your arrears at any point, even if they've started legal action. You may be able to come to an arrangement that allows you to keep your home.

Pay something towards your arrears

If you can, pay something towards your mortgage arrears.

Even if you can't pay your full monthly instalment, paying what you can afford shows you are making your mortgage a priority.

Small regular payments can:

  • help to build trust with your lender
  • show that you're reliable
  • show you're trying to manage your budget

Check your insurance cover

If your income falls because of an accident, illness or redundancy, mortgage payment protection insurance (MPPI) could help you pay your mortgage.

Check with your lender or broker if you took out a policy with your mortgage.

Find out more from Which? about MPPI.

Ask to change your mortgage terms

Before your lender starts possession proceedings, ask if it's possible to change the terms or type of your mortgage.

You could ask your lender to:

  • extend your mortgage term
  • change the type of mortgage you have
  • have a payment holiday (a temporary break from making payments)
  • reduce payments
  • capitalise the arrears (adding arrears amount to the total mortgage)

It's usually easier to make changes to your mortgage terms before you get into arrears.

Get independent financial advice before making any changes.

Find more from the Money Advice Service about finding an independent financial adviser.

Change your mortgage lender

It's usually easier to change to a different lender before you get into arrears.

Get independent financial advice before making any changes.

Find more from the Money Advice Service about changing your mortgage.

Check if you can claim help with mortgage payments

If you claim certain qualifying benefits, you may be able to get help with your mortgage through:

SMI and universal credit can only help with payment towards the interest of your mortgage, not the capital.

You will probably have to wait 39 weeks after you claim before you get any help paying mortgage interest. If you receive pension credit you can get help straightaway.

Tell your lender if you've applied for SMI or universal credit. Your lender shouldn't start possession action if your claim is likely to be successful.

You'll need to cover the shortfall if these payments won't cover your monthly mortgage payments. You must also show your lender you can pay what you owe for any period your claim won't cover.

Check if you can claim benefits

You may be able to claim certain benefits if you're unemployed, have a low income or can't work due to health problems. You may be eligible for tax credits if you have children or are working and have a low income.

Use the Gov.uk benefits calculator to find out what benefits you're eligible for and how to claim them.

Rent a room to a lodger

Consider if you could take in a lodger to increase your income.

Check your mortgage agreement. It might say you have to get permission from your lender before you rent out a room.

You must tell the DWP or HMRC about any income you get from renting a room. Rental income of more than £20 a week could affect how much benefit or tax credits you get.

Find out more from Gov.uk about renting out a room in your home.

Rent out your home

If you have somewhere else to stay, you could move out of your home and rent it out to tenants.

You must get permission from your lender. They may charge a higher interest rate on the mortgage if you no longer live there.

Check that the rent you charge covers the mortgage payments and the extra costs of being a landlord.

Find out more from Gov.uk about renting out your property.

Sell your home

If you won't be able to pay your mortgage or clear your arrears, it might be better to sell your home rather than wait for it to be repossessed.

You need your lender's permission to sell your home if you have negative equity.

Find more from the Money Advice Service about negative equity.

After the money from the sale has been taken off, you still owe what's left on the mortgage.

If you apply to the council for help because you're homeless, the council could decide you made yourself intentionally homeless by selling your home.

You probably won't be able to claim housing benefit if you stay in your home after selling it. Former owners can't usually claim housing benefit for a home they used to own.

Risks of voluntary repossession

If you leave your home and give your keys back to your lender, it's known as voluntary repossession.

After you do this, you're still responsible for:

  • mortgage payments, arrears and council tax until the property is sold
  • your lender's costs for selling the property

You must get independent advice if you are considering voluntary repossession.

Still need help?

Contact a Shelter adviser online or by phone

Last updated 29 Nov 2016 | © Shelter

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