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Avoiding Repossession - The Homeowners Guide

Avoiding Repossession - The Homeowners Guide

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In the current climate, many homeowners are facing ever-tightening budgets and falling income. This can be extremely stressful, and if you fall into arrears on your mortgage payments, seeking expert support is vital to avoid the situation getting any worse.

The last thing anybody wants is to lose their home, and so being proactive is the best solution to try and remedy things.

Should you be facing repossession, you should, as quickly as possible:

  • Assess your finances
  • Contact all lenders involved
  • Speak to a finance expert

The good news is that there are options available to avoid repossession and help you recover from this position. Revolution Finance Brokers work with specialist lenders who can offer refinancing to help avoid losing your property.

In some cases, we carry out simple renegotiations in light of the challenges our client is facing, and secure their ongoing mortgage at more favourable terms.

For fast, professional advice and immediate support, contact Revolution Brokers on 0330 304 3040 or drop us a message at info@revolutionbrokers.co.uk.

The following topics are covered below:

Can Repossession Rescue Finance Help Me?

Assessing Your Finances To Avoid Repossession

How Much Equity Do I Need in My Home to Avoid Repossession?

Assessing the Reason for Financial Difficulties

Keeping up with Repossession Finance Repayments

Properties Eligible for Repossession Rescue Finance

How Can I Avoid My Home Being Repossessed?

Contacting Your Mortgage Lender to Prevent Repossession

Selling Your Property to Avoid Repossession

Expert Advice with Repossession Rescue Finance

Can Repossession Rescue Finance Help Me?

Repossession rescue finance helps homeowners in crisis avoid losing their home, and usually consists of either:

  • A full remortgage, or
  • A second mortgage, or
  • A bridging loan.

Each type of loan is used to repay arrears or other debts, bring the payments up to date, and release equity from your property.

Once you have had time to recover and restore your finances, you are usually advised to then look at refinancing the rescue finance later down the line, so that you can secure better lending terms.

If you are looking at repossession and your bank has refused to help, or you have been rejected for emergency finance elsewhere - do not worry, there are plenty of lenders out there who specialise in helping people recover from a financial crisis.

For personal support, advice and recommendations on the best rescue finance for you, give our team a call on 0330 304 3040 or drop us a message at info@revolutionbrokers.co.uk.

Assessing Your Finances To Avoid Repossession

The first step is to work out where you are - how much do you owe, and how far behind have you fallen? If you are over two months behind, and have received a court order for repossession of your home, there are still options to avoid this.

If you are one month behind, the situation is of course much less critical than if you are over six months late on mortgage payments - the less severe your default, the more lenders who will be able to help.

Should you be further behind, this demonstrates a higher risk. Revolution Brokers do work with specialist lenders who may be able to support your application, but usually:

  • Fees will be higher.
  • Interest rates will be less competitive.
  • You will need higher equity - or lending will be restricted to a % of the value of your property.

This is why it is so important to act quickly to find the right solution before the problem escalates.

If you are unsure of the best way to avoid repossession or do not know whether repossession rescue finance is your best option, then contact the Revolution team on 0330 304 3040 and we will walk through the situation with you.

How Much Equity Do I Need in My Home to Avoid Repossession?

Most mortgage lenders who offer repossession rescue finance will need to see a reasonable level of equity in the property, because:

  • That means that they can lend funds to pay off other debts.
  • There is enough security in the property to protect them from risk.

The terms and borrowing you can get depends on how far behind you are with your arrears, and any other relevant factors on your credit file.

Homeowners with equity of around 50% or higher are a much lower risk than applicants looking for an 80% LTV or more.

If you have a previously clean credit record, you may be able to borrow up to 95% LTV - but this will be much lower if you have been struggling with credit issues for some time and have fallen into arrears with your mortgage.

You may hear about non-equity loans, which can lend you more than your property is worth - and up to 120% of your home's value.

However, this is a very specialist type of finance, is often extremely expensive, and should only ever be considered as a last resort and in the short-term to avoid getting into further financial difficulties.

It's common to have other debts as well as falling into arrears with your mortgage. For most people, mortgage payments are the last thing you wish to default on, and so you may have stopped paying other bills beforehand to be able to keep up with your mortgage for as long as possible.

Very often, applicants will need to borrow money to clear other debts, as well as to avoid repossession.

This will, of course, be reflected in your credit report, which will show any late payments, defaults or financial difficulties - and the more issues shown, the more difficult it is to secure new financing.

Most lenders will want to see evidence that they are lending responsibly, and that you will be able to keep up with the repayments once the other debts have been cleared.

Assessing the Reason for Financial Difficulties

The reason you have fallen behind in your mortgage payments can make a big difference.

In the current economic climate, many people are reliant on government support and furlough schemes, and with mass-redundancies predicted some lenders could offer payment holidays, more flexible finance, and emergency support.

Suppose you have experienced an emergency that has caused the financial strain. In that case, some mortgage providers may be able to help, and will not proceed with a repossession order if you have been proactive in contacting them to explain what has happened.

Where circumstances could not have been foreseen, or a significant life event has occurred which has impacted your income and caused you to default, the most important thing is to get in contact with your mortgage lender.

Examples include redundancy, illness and injury - in which case a lender might offer support until you have recovered or found a new job.

Should there be no extenuating circumstances and you have mismanaged your budget it is less likely that a mortgage lender will be able to offer much flexibility.

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Keeping up with Repossession Finance Repayments

Lenders will need to know that you can afford to keep up with the repayments before offering repossession rescue finance.

Income and affordability are essential criteria. If you can meet the repayments, a lender is likely to be able to consolidate all of your outstanding debts into one mortgage, or a second mortgage.

In some cases, you can also apply for a longer mortgage term to reduce the monthly payments and keep them comfortably within your budget.

Mortgage lenders will consider:

  • The circumstances that led to the defaults and whether your income has now stabilised.
  • Whether you are likely to be able to manage the repayments in the long-term, or whether similar difficulties are likely to arise in the future.
  • If you have a stable, reliable income and a permanent job role.

Reliable income is key; although different lenders will use different calculations. For example, some will only accept salaried income as part of the income calculations, whereas others will include all bonuses, commissions and dividends.

Affordability is usually calculated as a multiple of your income - so typically the maximum offer will be up to 4-4.5 times your annual wage. Some lenders can offer more, even as high as 5-6 times your salary.

If you need repossession rescue finance and would like to identify the best lenders to apply to, contact Revolution Finance Brokers today on 0330 304 3040.

Properties Eligible for Repossession Rescue Finance

Refinancing your home to avoid repossession will involve a valuation - this helps the lender see what the property is worth and therefore calculate what they can lend against it.

Every lender will have a different policy, but traditional brick-built homes are usually the easiest property type to lend against.

Unusual properties, such as those with a thatched roof or timber frame, and those in need of repair, can be more difficult to lend against.

As a repossession rescue expert, the Revolution team is on hand to provide help with emergency finances in any situation. If you have a non-standard property or a home in need or renovation, contact the team, and we will work through the best options.

How Can I Avoid My Home Being Repossessed?

There are three primary ways to protect your home and prevent repossession from going ahead:

  1. Contact your lender and see if negotiation is possible.
  2. Sell your property and use the proceeds to repay the debt.
  3. Seek repossession rescue financing.

Contacting Your Mortgage Lender to Prevent Repossession

Some lenders will offer a range of emergency options or additional facilities to help borrowers cope in difficult times. For example, payment holidays can often be included as an option within your mortgage terms, that you might not be aware of.

Mortgage facilities can include:

  • Payment holidays
  • Drawing down overpayments
  • An extension to the mortgage term to reduce monthly costs

In most cases, a lender will do everything possible to avoid repossession, so it is always wise to contact them in the first instance to discuss the options and see what they can offer.

You might also be offered an extended loan secured against your equity to help you consolidate debt.

If you haven't been able to negotiate with your lender, or need professional support with these discussions, contact Revolution on 0330 304 3040.

Selling Your Property to Avoid Repossession

Another option, and often a final resort, is to sell your property. This is usually only chosen because you cannot secure any financing and cannot keep up with repayments.

Although a tough decision, in the long-term it is better to have chosen to sell your home to repay debts than to allow a repossession to take place.

Remember though, that even if you do so and manage to avoid a repossession, it may still be considered as such by future lenders given that the mortgage defaults and subsequent sale will be recorded on your credit file.

Expert Advice with Repossession Rescue Finance

The Revolution team works with clients who have experienced severe financial difficulties and are seeking secure solutions to avoid a repossession scenario.

Whether you have decided on the sort of rescue finance you think is most suited, or need professional advice to work through the options available, we are here to help.

As an independent broker, we have access to a vast network of specialist funding partners who offer emergency finance outside of the scope of mainstream lenders. We can often find a solution to avoid you losing your home.

Contact us now on 0330 304 3040 or send us a message to info@revolutionbrokers.co.uk.

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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