If you fall behind on your mortgage payments your lender has a legal right to repossess your property. Losing your home is extremely upsetting and stressful, and everything should be done to avoid ending up in this situation, but unfortunately sometimes it is inevitable. Being aware of how repossession works and taking steps at the earliest stage to resolve the problem gives you the best chance of holding onto your home.
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Your lender will write to you in the first instance to ask you to pay your missed mortgage payments. Your lender must give you a reasonable opportunity to settle your arrears in accordance with the pre-action protocol, by sending you several letters, making you aware of the threat of repossession and trying to work out a payment plan with you to help you settle your debt and keep possession of your home. Your lender should offer a different type of mortgage to you if this will help you settle the arrears, for example switching a capital and interest mortgage to an interest only mortgage.
If you are at least two months in arrears, your lender can enforce their legal right to repossess your home. If you have permanently left the property, the lender can simply go there, change the locks and put it on the market for sale. If you are still occupying the property, the lender has to apply to court for an Order for Possession. The lender must provide the court with evidence that the pre-action protocol has been adhered to and show that it has not been possible to come to an arrangement for repayment of the arrears. The court will arrange a hearing, which you will be invited to attend along with the lender's solicitor. You are not under any legal obligation to be present, but if you don't attend it is highly likely that the Order for Possession will be granted in your absence. If you attend you have the right to request an adjournment of the hearing to give you more time to make arrangements to pay the arrears. You will need to provide the court with your proposed repayment plan, and you may need to make a lump sum payment on the day. If you are unable to stick to the repayment plan, the court will go ahead and grant the Order for Possession.
The eviction process starts after the lender has the Order for Possession. A warrant for eviction must be obtained from the court. You will receive 30 days' notice of eviction, beginning on the date the warrant is granted. When this notice period has lapsed, court bailiffs will arrive at your property with a locksmith instructed by the lender. If you are there, you will be asked to leave and the locksmith will change the locks.
After your house is repossessed the lender will instruct a manager to arrange the disconnection of services to the property and work out what work needs to be done to put the property in a good state of repair. The costs of the work, plus the manager's fees, will be added to the mortgage arrears. When the house is ready to go on the market, an estate agent will be appointed to act for the lender. The property should not be sold for below market value unless this proves to be impossible to achieve. If the proceeds of sale are not enough to clear your mortgage debt in full, the lender has the right to pursue you for any remaining debt. If there is money left over after the house is sold, it will be distributed to any other creditors, normally beginning with the one whose interest was registered first. If there are no other creditors, the surplus will be paid to you.
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