Mortgage Guides

Repossession: What to do if you can’t pay your mortgage

Writes Hazel Cottrell hazel@consumerchoices.co.uk

Are you worried about having your home repossessed? Our guide explains what you should do if you can’t pay your mortgage… (4/9/09)

Santander Fixed Rate Mortgages

Santander offer a great range of award winning
fixed rate mortgages from 4.1%
Fix your mortgage for up to 5 years

on Santander mortgages

Call Santander on 0800 032 4266

Repossession is a real fear for many people. The Council of Mortgage Lenders (CML) (www.cml.org.uk) has predicted that 65,000 homes will be repossessed as a result of mortgage arrears in 2009.

But what can you do to try to avoid repossession?

In this guide we show you steps you can take if you can’t pay your mortgage and what to do if your lender takes you to court. Plus we tell you the best places to find further free advice.

What to do if you can’t pay your mortgage

If you are struggling to meet your mortgage repayments, the worst thing you can do is ignore the problem – it’s unlikely to go away by itself. Instead, make sure you do the following three things to give yourself the best chance of avoiding repossession:

Read anything your lender sends you – Don’t ignore letters from your mortgage provider. It’s crucial that you open all your post, read it and act upon it where necessary. If you have fallen behind with your mortgage payments, your lender will send you a “notice of default”. If you don’t respond to this letter, your lender can start legal action to repossess your home.
Speak to your lender – Talking to your lender may help you find an alternative solution to repossession. The earlier you contact your lender to let them know you are struggling, the more options you are likely to have. To help you manage your repayments, your lender may be able to change the term of your loan, accept reduced payments for the short term or add your repayment debt to the amount you have borrowed.
Seek independent help and advice – If you are worried about repossession, you shouldn’t hesitate to ask for help. Organisations like the Citizens Advice Bureau can offer you free and impartial money advice and can help you explore all your options, including government schemes. See the section below, ‘How to get further help and advice’, for more details.

Back to the top

What to do if your lender takes you to court

If you do not respond to a “notice of default” that your lender sends you, or if you cannot reach a repayment agreement, your lender may ask the court to evict you. This is called making a “claim for possession” and the court will send you paperwork.

If this happens, it’s crucial that you keep talking to your lender, as you may still be able to reach an agreement before the hearing.

It’s also crucial that you seek free, independent help from an expert (see section below), who can help you speak to your lender, help you complete the court paperwork and explore all your options with you.

If you can’t come to an agreement with your lender, you must prepare for and attend the court hearing. Here you will be able to explain to the judge why you have had difficulties paying your mortgage and how you could repay arrears in the future. If you don’t attend, it’s likely the judge will decide you lose the rights to your home.

For more information on how to prepare for the hearing, what happens on the day and what to expect after a court hearing, check out the new repossession section on the government’s website, Directgov (www.direct.gov.uk).

Back to the top

How to get further help and advice

There is plenty of free help available for people who are worried about losing their home, and you should not hesitate to make the most of it. For most people, the best first step to getting help will be to speak with an adviser at a free and independent advice agency.

As well as helping you put together a plan for managing your debt, an adviser can explore all the options available to you, including financial support from the government, like the Homeowner Mortgage Support Scheme or the Mortgage Rescue Scheme, and any benefits or financial support you may be eligible for.

For example, if you are claiming certain benefits and your mortgage is less than £200,000, you may be eligible for support for your mortgage interest payments after 13 weeks.

The following independent organisations have been approved by the government to give advice about mortgage and debt problems:

The Citizens Advice Bureau (www.citizensadvice.org.uk) offers confidential advice by phone and face-to-face. Visit the website to find your local CAB
The National Debtline (www.nationaldebtline.co.uk) provides information and resources for coping with debt on their website as well as a helpline on 0808 808 4000
The Consumer Credit Counselling Service (www.cccs.co.uk) offers advice, support and counselling for anyone who is worried about debt. You can call the helpline free on 0800 138 1111.
Shelter (england.shelter.org.uk) offers free, confidential advice about housing and debt. In England, you can call 0300 3300 515 for advice about the Homeowner Mortgage Support Scheme or 0808 800 4444 for general advice.

If you are facing repossession, your local council will also be able to help. They can give you money advice and help you find alternative accommodation if necessary.

Find your local council

When visiting an adviser, or speaking to one over the phone, it will help if you have relevant documents to hand. For example, full details of your mortgage including the account number and your lender’s name and address, any court papers, wage slips, benefit or pension book, bank statements, bills and details of any other expenses.

For more information on all aspects of repossession and available help, see the government’s website, Directgov (www.direct.gov.uk). It provides help and advice for renters as well as homeowners.