Before doing anything, remember to talk through your situation with a housing charity.
They are all free to call, 100% impartial and can help you make the right decision.
Remember that, even though you’re behind with your mortgage, the law is there to protect you.
Your mortgage lender may have the legal right to repossess your home, but this doesn’t mean that they can pressurise or bully you.
First off, we suggest talking to charities and not-for-profit organisations below. They are often good people to speak with as they have no hidden agenda.
Free advice, support and guidance via a range of online resources. Shelter also has a helpline open 365 days a year (8am to 8pm on weekdays and 9am to 5pm on weekends). The regular number is 0808 800 4444. In emergency situations, you can call 0808 1644 660.
Search for information online or enter your postcode/town in the orange box to contact your local office directly.
The organisation provides education, information and advice aimed at simplifying money matters. Call 0808 808 4000 Monday-Friday 9am–8pm and Saturday 9:30am-1pm (their offices are closed on Sundays).
If you are a business owner or shareholder undergoing financial difficulties with your personal residence, this organisation can provide you with some useful advice. Call 0800 197 6026 Monday-Friday 9am–5.30pm (offices are closed at the weekends).
A charity that provides confidential support and advice to anyone worried about loans or debt issues. Call 0800 043 4050 Monday-Friday 8am–8pm and Saturday 9:30am-3pm (their offices are closed on Sundays).
An online resource with debt and budget management advice. Please note that this is not a direct advisory service.
Also remember, if you feel that your lender is being unfair, don’t be afraid to send a formal complaint to their head office. You can find the email address on your mortgage documents or via a Google search.
If you haven’t paid your mortgage in the last month, there’s usually not too much to worry about. But this doesn’t mean you should not take action.
We often find that homeowners who ‘bury their heads in the sand’ are most at risk of things progressing to court.
In short, the earlier you deal with the situation the better…
Once your mortgage lender notices that you are in arrears, they will usually send a formal letter or ‘default notice’. You must take action straight away and maintain regular communication.
Explain that you are aware of the situation and answer any questions they have. Remember that mortgage lenders are not monsters and have a legal obligation to help you.
Section 13.3.2A* of the Mortgages and Home Finance: Conduct of Business Sourcebook states that mortgage lenders must:
(1) Make reasonable efforts to reach an agreement with a customer over the method of repaying any payment shortfall;
(2) Liaise with a third party source of advice regarding the payment shortfall;
(3) Allow a reasonable time over which the payment shortfall should be repaid. They must also explore the possibility of a payment plan, in line with the circumstances of the customer;
(4) Unless it has a good reason not to, grant a customer’s request to change the mortgage payment date or the method of payment;
(5) Allow the customer to remain in possession for a reasonable period to sell the property;
(6) Not repossess the property unless all other reasonable attempts to resolve the position have failed.
* Note that we have summarised this part of the policy. You can read it in full here.
If you have the means to pay your mortgage payment within a week or two, give the lender a firm date. They will make a note on their system. You should call them again once the payment has gone through.
Not able to meet your mortgage payment on the promised date?
Contact your mortgage lender immediately. They will want to know when and how you will clear your mortgage debt. If your wages are delayed, ask your employer to write an email or a letter explaining the situation.
The lender may also request information on your income which you should send as quickly as possible.
Do not be afraid to call your mortgage lender any time you need to. You can check that they are not escalating your case to their legal team or taking further action.
Also, if you wish, you can change the date of your mortgage payment or discuss some kind of payment plan.
1 Month Mortgage Arrears – Checklist
If you can pay what you owe to the mortgage company in 1 or 2 weeks, there shouldn’t be any issues;
Even if you’re a day late, contact your lender and explain the situation;
Give them a firm date as to when you can pay;
Be honest about your financial situation. Remember mortgage lenders have a legal obligation to help you;
House repossession is the last resort for lenders. They never want to go through the process unless they really have to.
Stop Repossession – 2 Months Mortgage Arrears
If you have now missed two payments, there isstill every chance that you can avoid repossession.
But, as the situation is getting more serious, it is vital for you to make a clear effort to resolve things.
Failing to act on your part usually means that the lender will think the worst.
Your mortgage lender must work with you to get the issues resolved, even after they have started legal action.
Pre-Action Protocol for Possession Claims
Many homeowners are unaware that mortgage lenders must follow ‘pre-action protocol’ rules.
These rules state that they should treat you fairly, discuss your financial situation and give you a reasonable timeframe to pay off any arrears. The lender should explore all of your options before anything else.
Furthermore, legal action to take possession of your home is the very last resort.
You should have already received a letter informing you of the following:
The amount of arrears;
Your payments over the previous two years;
Your monthly instalments;
How much you owe in total; and
The interest or any charges that will be made.
This letter should be easily understandable. Contact your mortgage lender directly if anything is not clear.
The pre-action protocol rules also state that lenders cannot start court proceedings if:
You have made a valid insurance claim under a mortgage payment protection policy. This insurance policy covers you in the event of unemployment or sickness;
You have applied for Support for Mortgage Interest (SMI) to help cover your mortgage costs. Note that from April 2018, SMI has changed from a benefit to an interest-bearing loan;
You are accessing the Preventing Repossessions Fund through your local council;
You have shown your lender that you can pay what you owe for any period not covered by your claims and cover any shortfall;
You are getting help from your local council under a homeless prevention scheme. You can find information about this via a Google search or contacting the main switchboard at your local council who will connect you with the right department;
You have made a claim to the Department for Work and Pensions (DWP) for income support, income-based Job Seeker’s Allowance (JSA), pension credits (if you are over 60), tax credits, Universal Credit and/or income-related Employment and Support Allowance (ESA). Note that you will need to prove your eligibility for these benefits;
Your income is about to improve enough for you to pay your mortgage. For example, you may have a better-paid job in place;
You are planning on renting out your property. Note that different rules will apply and you will have to obtain a ‘Consent to Let’ from your lender;
You have appointed a professional debt advisor to assist you. Such a qualified professional will liaise with the lender and the court on your behalf;
You have made a complaint to the Financial Ombudsman Service (FOS) about how your lender has been dealing with your arrears. You will need to provide valid proof of this communication to form a solid argument;
You are taking demonstrable steps to sell your home at a realistic price (see chapters 5 and 6 of this guide).
Communicating with Your Mortgage Lender
Most telephone conversations will be recorded when you speak with your lender. However, make a note of the dates, times and names of the people you speak with for future reference.
You should also note that mortgage lenders are regulated by the Financial Conduct Authority (FCA). This means that they are guided by strict legislation on how they should interact with you.
Mortgage Lenders Must Consider Your Proposals
Even though you have gone further into arrears, the mortgage lender will still have to appreciate your situation and consider any proposals you make.
Starting a possession claim should be a last resort and must not normally be started unless all other reasonable attempts to resolve the situation have failed. (Section 7.1 of the Pre-Action Protocol for Possession Claims).
Similar to the pre-action protocol rules, the FCA’s ‘Mortgages and Home Finance: Conduct of Business’ sourcebook also contains a number of provisions that oblige lenders to explore all the possible options to stop repossession:
The lender must consider whether, given the individual circumstances of the customer, it is appropriate to do one or more of the following:
(a) Extend the mortgage term;
(b) Change the mortgage type;
(c) Defer the payment of interest due on the mortgage;
(d) Treat the payment shortfall as if it was part of the original amount provided;
(e) Make use of any Government forbearance initiatives in which the firm chooses to participate.
A firm must give customers adequate information to understand the implications of any proposed arrangement.
* Note that we have summarised Section 13.3.4A that can be read in full here.
Should the mortgage lender not accept your suggestions, they must write to you and explain why (within 10 business days). Again, their communication should be clear and easy to understand.
Remember, the mortgage lender cannot continue any legal action whilst you are making your decision (within reason).
Keeping Your Promises with Your Mortgage Lender
At any stage of the process, should you come to an agreement with regards to repayment of arrears, please ensure you keep to your promises. If you fail to meet these obligations, your court order could be ‘fast-tracked’.
There is still a very strong chance that you will not lose your home;
Ensure that your mortgage lender is following the pre-action protocol rules. This means they must treat you fairly and discuss your financial situation with you. They must also give you a reasonable timeframe to pay off any arrears;
Make sure you been sent the right advisory leaflets;
Don’t be scared by your lender’s warnings of homelessness. It is a legal requirement for them to inform you of the risks;
Remember that court action can be delayed. For example, if you are waiting for a payment protection policy or other financial support, the mortgage lender must also wait;
The mortgage lender must respond to any proposals you make;
The mortgage lender must not put any pressure on you;
Make sure you stick by any promises you make with your lender. If there is a change in plans, contact them immediately.
Stop Repossession – 3 Months Mortgage Arrears
With 3 or more months of mortgage arrears, you’re likely to have a County Court date as the bank seeks possession.
Remember – even though things may seem very serious,it is still not a foregone conclusion that you will lose your home.
You should seek proper legal advice to ensure that you get the best outcome.
You have between three and eight weeks before the hearing. There is still time to get the issue resolved.
Once the case goes to court, the judge will want to look at the situation as a whole. His or her job is to consider both the lender´s and your side of the story.
We would recommend making copies for your own records and to take along to the court hearing. However, some lenders may make an online claim – in which case you can complete the defence form at: www.possessionclaim.gov.uk/pcol.
Please remember that, as long as you are honest about your situation and can show how you will get back on track with your mortgage payments, the law will protect you.
The judge will look at your side of the story more favourably if you have:
Acted in a responsible way by keeping in touch with your lender;
Informed your lender of your true financial situation;
Made sure you have responded quickly to phone calls, letters and emails;
Looked into all of your available options to pay off the mortgage arrears;
Tried discussing with your lender how you can come to some form of arrangement moving forward;
Made realistic proposals of how you can pay off your mortgage arrears (perhaps through ongoing employment, help from family or friends or other likely source).
You may also find that a representative from the lender approaches you outside of the courtroom with a proposal. Here, do not rush yourself into making a decision before thinking things through.
If the mortgage lender has not adequately followed the ‘pre-action protocol rules’ (see Chapter 2) the judge could also:
Delay the repossession court hearing to give you time to negotiate with your lender;
Order the lender to pay your legal costs;
Stop your lender from adding their costs on to what you already owe them.
Please get legal advice before the court hearing if you think your lender has not followed the rules.
Make Some Kind of Mortgage Payment (However Small…)
Prior to the court date, we normally suggest making some form of mortgage payment to demonstrate your commitment. The account details will normally be on the paperwork or you can call the lender directly. Remember, even if it is only a small amount, it shows you are making the effort.
Financial Assistance in Repossession Cases
If you decide to sell, some lenders offer Assisted Voluntary Sale support. This could mean they will give you time to sell, reduce your mortgage payments, pay your legal / estate agency costs and help you with a deposit / advanced costs for a rental property. See the factsheet here;
If you are on a low income, you may be entitled to free legal aid. The Legal Aid Agency funds Housing Possession Court Duty Schemes (HPCDS) across England. This means you can get vital legal advice and representation at court.
Repossession Case Outcomes
Once the judge has looked through your case, you may be granted a suspended possession order. This is also known as a ‘suspended warrant for possession’. This means you can remain in your home as long as you have a clear plan to pay off the arrears owed. Here, you must show that you can meet your obligations and keep to your promises.
The judge may adjourn if is not enough information to make a clear decision about your case. This can also happen if you getting the money together to pay off the arrears or selling your property (on the open market or to a fast buying company).
You may be given a Time Order. This can mean the court can make an order for the lender to reduce the amount payable on your loan, change the monthly amount, push forward the payment dates or extend the term.
Cases can also be struck off if the lender has also not played by the rules.
The worse case scenario is an outright possession order. This means that the lender has the right to repossess your home. You will usually have 28 days to vacate the property – but you may be able to extend this period.
Even though you have a court date, stay calm. Many people have been in your situation before and found a solution;
Make sure you have filled in the N11M personal defence form;
Make sure you have filled in the N244 form;
Have all the evidence prepared to support your case. A good solicitor will help you with this;
Try and make some kind of mortgage payment (even a small amount). This will show you’re doing your best to resolve the situation;
If you are honest and up-front, the judge will be on your side;
Usually, the best outcome is a ‘suspended possession order’. This means you can remain in your home as long as you have a clear plan to pay off what you owe in arrears.
Stop Repossession – Sell Your House on The Open Market
Sometimes, it may make more sense to sell up your house and move on with your life.
This means that you can clear the mortgage arrears, charges and the total debt owed.
If everything is done in the right way, it also means that your credit rating will stay in tact.
Should you decide to do so, there are a number of options for you to consider. Each has its own advantages and disadvantages
Sell Your House Through an Estate Agent
Using an estate agent means that you’re more likely to get the best price for your house.
But in most repossession scenarios, you will often need to sell to someone who can move quickly.
Below are some tips on how to find this type of buyer through an estate agent.
Try to look for the most established estate agents in your local area. Speak to at least three and make sure they’re knowledgeable. You do not have to tell them about your mortgage arrears but explain that you are looking for a quick sale and serious buyers only.
Don’t be afraid to ask them about how many houses the agent have sold in your area in recent months. Also time it is taking them to sell and the differences between asking and actual sold prices. Decent agents will have proof
Check reviews of the agent online and make sure they have the means to market your property well. You may want to check out our own Express Estate Agency services.
Make sure that you have a 4-6 week contract only. This is just in case the estate agent doesn’t perform well.
Once its on the market, make sure your house is priced to sell and the agent is proactive. It’s a good idea to build a relationship with the manager who you can speak to whenever you need to.
Check the credentials of any buyer that makes an offer.
In most cases, as long as you show your mortgage lender that you are making the effort to sell the property, they’ll be on your side. This means sending proof of advertising (links to your house for sale on Rightmove or Zoopla and other estate agent marketing material).
Remember to keep your mortgage lender updated of any progress. Also, make sure you’re keeping up to date with your mortgage – or at least what you can afford.
Sell Your Property at Auction
One of the more traditional ways of getting a more secure sale. The advantage here is that, once the hammer falls, contracts are exchanged. If the buyer pulls out, he/she loses all the deposit plus any fees paid.
In a repossession scenario, lenders will want to know that the reserve price will cover all the secured debt. This will not only be the total mortgage balance, but also any accumulated arrears, Early Repayment Charges (ERCs) and other fees.
The downsides of using an auction house include the fact that the fees tend to be higher than with estate agents. Also, you may have to wait for some time for a slot at the next auction.
According to the Future Auction organisation, selling properties through auction can take up to three months.
Furthermore, the sale is not entirely private and there is a risk that the property may not sell. For this reason, make sure the auctioneer prices it realistically.
Sell and Rent Back
You may have come across companies that will buy your house and rent it back to you.
Once the house is sold, they will draw up a rental contract for you to remain as a tenant. The rent is usually set at the going market rate with an initial contract of between 6 and 12 months.
Please be aware that this particular industry is now regulated by the Financial Conduct Authority (FCA) and companies must be registered with this regulatory body.
Check that any sell and rent back firm you approach is listed on the Financial Services Register via register.fca.org.uk.
Stop Repossession – Sell Your House Fast to Private Buyers
Another option is to sell your house to a fast buying company like Property Solvers.
Firms like ours have been operational since the early 2000s and serve to help homeowners sell in repossession situations.
It’s important that the firm is a genuine cash buyer. Therefore, this final chapter goes through what you should look before going ahead.
Google search terms such as “sell house fast”, “quick property sale” and “cash for houses” and 100’s of advertisements and websites will appear.
These days, it is reasonably easy to set up a fast sale operation and target homeowners. However, knowing which ones are legitimate operators is a different story.
Sadly, there are a number of scam operators. Although the Office of Fair Trading (OFT) investigation into the industry made some headway in cleaning up the bad practices, there’s still a long way to go.
Check their details/accounts on the Companies House website and see how long they have been in business. You can also request a credit report on the individual or housebuying company.
Most will pay your legal fees. Even so, make sure the solicitor is duly registered at The Law Society and has sufficient experience of dealing with repossession cases.
The solicitor should also confirm that you can pull out of the sale if quick sale company changes the price initially promised.
2. Check The Reviews
A simple Google Search of the fast sale company can tell you a lot. You’ll be able to see if they have experience of completing quickly and dealing with repossession cases.
Trust Pilot, Reviews.co.uk, Feefo, Reevoo, All Agents and Rater Agent often have legitimate reviews and customer feedback. Do a simple Google search where you may find some more reviews. Also, check out their social media profiles (Facebook, Twitter and LinkedIn).
3. Make Sure the Company Understands Your Situation
The better companies should take the time to understand your specific repossession case. Even if you are sure you want to sell, make sure they are genuinely helping you – not themselves.
4. Check the Timescales for Exchange and Completion
If repossession is imminent, you need to make sure that things will get done in time. If a quick sale company says they will complete in 7 days, hold them to account and ask for guarantees.
5. Proof of Funds
Make sure they actually have the funds to buy your property. You can ask for proof by requesting a bank statement or letter from their solicitor. Proof of an undrawn debt facility may also be valid, but you should check the details of the loan. The court may also request to see this as evidence of the sale.
You should also make sure that there are no hidden charges/fees or unfair contractual terms.
6. Check that the Offer Will Not Be Dropped at the Last Minute
If the fast sale company states that ‘what they say is what they pay’, request written confirmation – preferably from their solicitor.
There are occasions where the survey reveals unexpected findings. In such scenarios, you should be given a sufficient amount of time to make a choice as to whether you want to move forward (or not).