What is repossession?

Your lender can apply to court to repossess your home if you miss mortgage or other loan repayments secured on your home. 

What is repossession?

Your mortgage lender has a financial stake in your home.

Your lender can apply to court for a possession order if you have mortgage arrears. They do this so they can sell your home and recover the money you owe. 

Repossession should be a last resort.

You could also be affected by repossession if you rent and your landlord is in mortgage arrears.

What happens to your home after repossession

The lender sells your home and keeps some of the proceeds to pay off:     

  • your mortgage debt
  • legal costs of repossession
  • costs of sale

Any other loans secured on the property are also paid off from the sale. 

The lender must pay any money left over to you.

You won't get any money back if there's not enough equity in the property to pay off the mortgage or other secured loans. Lenders can take further action to recover their money

The repossession process

Your lender must follow certain rules before taking action. They must try to discuss your financial situation and give you a reasonable chance to pay off any arrears.  

If your arrears build up, the lender will usually start repossession action in court. 

There will be a possession hearing where a judge decides if a possession order should be made. 

You may be allowed to stay in your home if you can show that you can:

  • meet ongoing mortgage repayments
  • clear your arrears in instalments over a reasonable period  

If the court makes an outright possession order, or you don't keep to the terms of a suspended order, your lender can ask the court for permission for bailiffs to evict you.

How to avoid repossession

Always open letters from your mortgage lender or loan provider. Early action gives you more options and time to find a solution to your problems. 

Contact your lender about payment problems or arrears as soon as possible.

You should also get debt or money advice at an early stage to help you deal with payment problems.

Make sure you attend the possession hearing as it's an opportunity to talk to your lender and explain your situation to the court.

You may be able to see a duty adviser at court but it's best to get legal advice before the court date if possible.

Even if the court makes a possession order, you might be able to prevent an eviction so seek urgent advice. You may qualify for legal aid if you're on a low income:

Contact Civil Legal Advice on 0345 345 4 345

Voluntary repossession

Voluntary repossession is when you leave your home and return the keys to the lender so they can sell the property.

It's not usually a good option because you:

  • probably have to pay for somewhere else to live
  • remain liable for the mortgage until the property is sold  
  • could be found intentionally homeless if you ask for council help with housing

Get advice before giving up your home voluntarily. There may be a better option. 

Finding a home after repossession

The repossession process can take several months. You have time to plan and look for another home if repossession is unavoidable.

Find out more about your housing options after repossession

Still need help?

Contact a Shelter adviser online, by phone or in person

Last updated 07 Jun 2018 | © Shelter

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