Voluntary repossession and handing back the keys

Find out why voluntary repossession is not recommended.

Avoid voluntary repossession

Voluntary repossession means giving the keys to your lender and moving out so they can sell the property to pay off your mortgage.

You cannot live in your home once you've handed in your keys. But you're still responsible for mortgage interest, buildings insurance and maintenance costs until it's sold.   

Handing back the keys can also affect:

  • how the council helps if you're homeless

  • your benefit entitlement

  • the sale price for your home

Help from the council

You can ask the council for help if you cannot afford your mortgage and have arrears.

The council must look into your situation and how they have to help you.

They can advise on different housing options if your home is no longer affordable.

If you hand back your keys and move out before you need to, the council might decide you're intentionally homeless. This affects how much help you get from the council.

Do not hand back the keys if you have nowhere else to go.

How benefits are affected

If you move out, equity in the property can affect your benefits.

Equity is any money you will get after your home is sold and the mortgage and any other secured debts are paid off. 

It can affect your benefits before you get any money from the equity. This is because the DWP works out what you're likely to get following a sale at current market value. 

If there's more than £6,000 equity and you move out, your benefits could reduce or stop.

Benefits will not usually be affected if you’re in negative equity or would get less than £6,000 after a sale.

Sometimes equity can be ignored. For example, if you've moved out after a recent relationship breakdown or you’re taking reasonable steps to sell the property.

Get benefits advice on your personal situation.

Sale price for your home

Lenders must sell repossessed homes for the best price they can reasonably get - this includes voluntary repossessions. 

But the sale price may be less than you'd get if you sell the property yourself.

Lenders sometimes sell repossessed properties at auction to get a quick sale, particularly if there's little or no equity or if property prices are falling. 

A property sold at auction may go for less than one marketed through an agent. 

The sale price could also be affected if there are problems with vandalism, theft or repairs while the property is empty.

Find out what happens when a lender sells your home.

Last updated: 9 August 2021

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