What is repossession?
Repossession allows mortgage lenders or freeholders to repossess homes if current tenants fail to meet the arranged payments. Ownership of your home can be taken if you fail to meet mortgage payments or other secured loans, as well as missing rent payments. Repossession is however a last resort and negotiation should be offered first before any decisions can take place.
Who can repossess my home?
When you buy a property with a mortgage, you ‘borrow’ the funds needed in order to own the property, but this still means the mortgage lender has a financial claim against it. Because of this, if you don’t keep up with mortgage payments, including interest payments and fees, the lender may decide that the best way to claim back the money that’s been lent to you is to repossess your home.
Repossession follows a strict legal process, and only a court can decide whether or not a lender can repossess your home. Likewise, it is only courts who can decide if bailiffs can be sent to evict you from the property, returning the property to the lender. The lender will then sell your home in order to pay back any costs and payments that have been missed.
Am I at risk?
As a homeowner, there are many factors that may change or decide whether or not it is possible you will lose your home due to missed payments. You could lose your home if:
– A bankruptcy order has been made against you
– The local council or other public body makes a ‘compulsory purchase order’ to purchase your home. This sometimes happens if there is very major planned local development, for example widening a road.
– If you rent a property, you could be affected by repossession if your landlord does not pay the mortgage. The property may be repossessed by your landlord’s mortgage lender (as discussed above).
It is an essential requirement that landlords ensure mortgage repayments can be met before securing a mortgage or loan. Failure to do so in the past has resulted in ‘sub-prime mortgages’ and is arguably one of the largest contributing factors to the financial crisis. Although this is the case, this is circumstantial and income may change due to factors such as:
– Redundancy or reduced hours in employment
– Illness, disabilities or accidents
– Divorce or separation, bereavement and pregnancy
– Having children (also includes adopting children)
If you would like to find out more about repossession or need some financial advice, check out Paul Lewis on the show ‘Money Box’ played regularly on BBC Radio 4. ‘Moneybox’ offers a useful insight into key issues, including repossession and financial planning to ensure you can keep up with financial commitments such as mortgage payments. This article from an estate agency in Reading highlights the growing rift in London’s house prices which causes all sorts of trouble for housing in London.
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