What happens when a lender sells your home

Your mortgage lender can sell your home after repossession but the sale price might not cover all you owe.

You can sell your home before repossession.

What happens once the lender has possession

Your lender must sell the property for the best price they can reasonably get.

Most lenders will market the property through an estate agent in the usual way.

Sometimes a property can be sold at auction to get a quicker sale.

Mortgage payments after repossession

You don't have to pay any more instalments on your mortgage once a court makes an outright possession order.

You can still be charged interest on what you owe until your home is sold.

Responsibility for repairs and maintenance

Your lender must take care of the property until it is sold.

They must deal with emergency or essential repairs and may also undertake basic maintenance work.

They can charge for this. The charges will usually be added to what you owe.

When the property is sold

Your lender uses the money from the sale to repay what you owe them.

This includes the:

  • outstanding mortgage debt
  • lender's legal costs
  • estate agent or auction house fees
  • bills for repairs and maintenance

Any money left is used to pay off any other debts secured on your home.

The lender must then pay any money left over to you.

If the sale doesn't cover your debt

You will still owe money to your lender or mortgage indemnity insurer unless they agree to write off the debt. 

This is called a mortgage shortfall. There are various options for dealing with this debt.

Last updated 05 November 2019 | © Shelter

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