You can choose to sell your home to avoid repossession if you have mortgage arrears.
When to think about selling
Selling your home can help pay off your mortgage and any arrears you owe.
Your home is likely to sell for a higher price before repossession. It will usually sell for less if it is sold by the lender after repossession.
Think about selling your home if it will leave you with some money left over.
You may be able to pay off your mortgage and debts and have some money to cover the costs of private renting or a new smaller mortgage.
Selling puts you in control and means you can plan your move.
Things to consider
Think carefully about:
- selling costs
- the current condition of your home
- possible debts if your home sells for less than you think it will
- changes in the housing market that could affect how long a sale takes
Make sure you get a realistic valuation of your home before you sell.
Get independent advice. Some companies make money out of buying your home at less than its value. Remember that their main concern is a quick sale, not making sure you have somewhere to live.
Risks if you sell
You may not get much help from the council if you have nowhere to live after a sale.
The council could decide that you're intentionally homeless if you had other options. For example, if you could have:
Your benefit entitlement can also be affected. You may not be able to claim any benefits if you receive more than £16,000 from a sale after paying off the mortgage.
If you are in negative equity
Negative equity means the value of your home is less than the value of your mortgage.
You usually need your lender’s permission to sell if you're in negative equity but you can ask the court to override this.
The sale may not cover what you owe and you could still be in debt.
Instead of selling by yourself, you could think about an assisted voluntary sale.
Assisted voluntary sale
An assisted voluntary sale is where a lender helps you sell your home. Lenders offer different amounts of support. Some will only help if you meet certain criteria, for example, if you are in negative equity or you can’t afford a repayment plan.
A lender could:
- give you 3 to 12 months to sell your home
- agree to reduced mortgage payments
- pause repossession action
- pay your conveyancing fee
- provide a deposit and rent in advance for private rented housing
Some lenders don’t have formal schemes but could still offer you help.
Contact your lender to discuss your options. If they won't help you could complain to the Financial Ombudsman Service (FOS).
What your lender must do if you sell
Your lender should delay repossession court action to allow time for a sale.
You need to show your lender you are making serious efforts to sell your home. Provide your lender with proof that it's on the market and give them permission to speak to your conveyancer or estate agent about progress.
If your lender decides to proceed with court action they must inform you why they are doing this 5 days before they apply to court.
If a repossession hearing still happens
Make sure you attend your hearing. You can ask for an adjournment if a sale will happen soon. You may have to provide evidence of this.
The court could make a possession order if you don’t have a buyer. It could be set for a later date to allow more time for the sale to complete.
Last updated 01 November 2019 | © Shelter
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