What Not to do if your Home is Repossessed

If your mortgage lender is granted a possession order and you receive notification to leave the property, your mortgage lender will usually put the property up for sale. Often auctions are used for a quick sale, but auctioned properties don’t always sell at market value. You will be responsible for all mortgage and mortgage interest payments until the sale and all the sale costs, including estate agents’ fees, solicitors’ fees, surveyors’ fees, utility bills and other costs associated with the sale.

If there is a shortfall, ie you owe more than the property is sold for, your mortgage lender can demand you make up the shortfall for up to 12 years in England and Wales. Council of Mortgage Lender members have agreed that they will chase shortfall debts within 6 years of the property being sold, but this is voluntary and may not apply.

If your home is repossessed:

Don’t forget your credit rating will be affected

A repossession will be recorded on your credit rating and will make it difficult for you to apply for credit cards and future loans.

Do not post your keys back to the mortgage lender

You will still be liable for any shortfall from the sale of the property. It is difficult to face a forced sale of your home, but it is in your interests to ensure that the sale proceeds and you negotiate a sensible schedule for the repayment of any shortfall.

Do not lose touch with your mortgage lender

Your mortgage lender can chase you for any shortfall for up to 12 years and charge interest. So it is better to keep in touch and negotiate a sensible repayment schedule rather than try to disappear and be hit with a large, surprise debt later.

Do not damage the property

It is in your best interests for the property to achieve the best sale price possible as this will help reduce any shortfall. A damaged or trashed property will not achieve the best price possible and you will be hit with a larger debt.

Do not rush into a Sale and Rent Back Agreement

Sale and rent back companies buy a home for less than the market value and then rent the property back to the original owner at market rents. Homeowners can use the proceeds from the sale to settle their mortgage and any outstanding debts while remaining in their own home. The key disadvantages are that the property is sold for less than it is worth and may be sold to another landlord or the previous homeowners could find themselves evicted at the end of their shorthold tenancy. If you are considering a sale and rent back agreement, get a number of quotes from different sale and rent back companies first and check the small print about the tenancy details and your rights as a tenant in your previous home.

Lawson-West Estate Agents have experience of selling repossessed homes. Phone either Nigel on 0116 212 1122 or Daniel on 0116 212 1168 for a free market appraisal now.

Lawson-West, solicitors, can do the legal work involved with a remortgage, call 0116 212 1000 for a quote now.