One of the most common concerns among homeowners in the UK is the risk of repossession following missed mortgage payments. For anyone who has missed a mortgage payment, a common question pops up – how many missed mortgage payments before repossession?
Generally speaking, lenders are likely to take action if you miss more than four consecutive payments or fail to make up arrears within a certain period of time.
However, the number of missed mortgage payments required before repossession can vary depending on your lender and the individual circumstances of your case.
In this article, we will delve into how many missed mortgage payments can lead to repossession and explore the options available to homeowners in such situations.
What Are House Repayments Arrears?
House repayment arrears, in simple terms, is just a fancy way of saying you’re behind on your mortgage payments.
Imagine when you lend a toy to a friend, and you expect them to return it after a week. But they don’t return it on time, and now they owe you. This is similar to what happens when you are ‘in arrears‘.
When you take out a mortgage, you agree to pay back a certain amount to the bank each month. If you start missing these payments, you’re in arrears. The bank, just like you would with your friend, expects what was agreed to be returned.
And if you can’t catch up on your missed payments, the bank might have to consider repossession, which is like them taking your toy back because you didn’t keep your end of the deal.
How Many Missed Mortgage Payments Before Repossession?
The exact number of missed mortgage payments required before repossession varies from lender to lender and from case to case.
Typically, a lender will begin to take action if you miss more than four consecutive mortgage payments or fail to make up arrears within a certain period of time. This can include imposing penalties, initiating collection efforts, or even taking legal action to recover the outstanding amounts.
In most cases, lenders will contact the borrower as soon as they become aware that payments have been missed.
Depending on the lender, they may allow the borrower to catch up with arrears through a payment agreement or, if more serious measures are required, repossession.
It is important to remember that repossession is the last resort for lenders because it is costly and time-consuming. They will often be willing to discuss alternative payment arrangements or deferment options that can help you avoid repossession altogether.
What is Grace Period for Mortgage Payments?
Many lenders offer a grace period for mortgage payments. This is usually between 15-30 days after the due date when borrowers can make up missed payments without incurring any additional penalty fees or arrears.
What Happens After The Missed Payment Grace Period?
Once this grace period of your mortgage payment has expired, a late payment will be recorded and your lender may begin to take action if more payments are not made up.
As mentioned, this could include initiating collection efforts or legal action and may ultimately result in repossession.
What is The House Repossession Process?
The process of house repossession may seem daunting, but understanding each step can help you navigate the situation. Here are the steps involved:
- Missed Payments: It all starts when you miss your mortgage payments. After you’ve missed a few (usually it’s four), your lender will start taking note.
- Contact from Lender: Your lender will reach out to you, usually via letters or phone calls, to discuss the issue and potential solutions.
- Legal Action: If the missed payments continue without any agreed solution, your lender might start a legal process to repossess your home. They’ll need to apply to the court for permission.
- Court Hearing: There will be a hearing in which you can present your case. You might be able to reach an agreement with your lender to repay your arrears in a manageable way.
- Repossession Order: If an agreement can’t be reached, the court might issue a repossession order. This gives your lender the right to evict you from your home.
- Eviction Notice: You’ll receive an eviction notice telling you the date you must leave the property.
- Eviction: If you haven’t left by the date on the eviction notice, bailiffs could come to remove you from the property.
How Can I Avoid Repossession?
Everyone’s situation is different, and there are a range of options available that could help you avoid repossession. Here are some suggestions:
Budgeting: Take a good look at your money. See where it’s going and where you can make cuts. Be sure to prioritise your debts.
Talk to your lender: Communication is key. Let them know you’re struggling. They may be able to offer you a payment holiday, extend the term of your mortgage to reduce payments, or change the type of mortgage you have.
Seek advice: There are many mortgage advisors out there that can help. They can offer advice on how to negotiate with your lender and may even be able to help you with other debts.
Consider renting out: If your lender allows, you could consider renting out a room in your property to help with the mortgage payments.
Government schemes: There are government schemes available that could help you keep your home, such as the Mortgage Rescue Scheme or Support for Mortgage Interest (SMI).
Sell your home: As a last resort, if your home is worth more than what you owe on it, consider selling it to pay off your debts.
Conclusion
Facing home repossession can be overwhelming, but hey, you’re not alone in this. By budgeting smartly, keeping the lines open with your lender, seeking mortgage expert advice, and exploring all options, you can tackle this challenge head-on. You just need to find the right solution for your situation.