Mortgage Arrears & House Repossession Advice

Payplan's Special Repossession Advice Team consists of qualified mortgage and debt advisers who give expert advice to support people who are facing house repossession orders.

Call the Special Repossession Advice Team free on 0800 917 7819

Or, submit your details online using the Debt Calculator for immediate House Repossession advice:

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Mortgage Arrears

No one gets into arrears on their mortgage on purpose.

However, it would be easy to imagine that your Mortgage Lender thinks you have given the attitude that some adopt and the way that some treat their customers. The sad truth is that falling into mortgage arrears is the first step in a very frightening game where everyone else holds the cards and knows the rules except you.

It may seem like this, but it isn't true.

The Mortgage Lender's Position

The last thing a Mortgage Lender wants to do is to repossess your house.

Why is this?

Basically, it's going to cost them money - money for solicitors and money for court fees which they could lose if the decision goes against them - which it can.

It also reflects badly on the lending policies of the company. We have all read information on this recently in the press and none like to be in this position. However, the fact that they are keen not to repossess will not be reflected in the letters they send you - either in tone or content or in the way some of their staff speak to you. Their tactic is to ensure that you do everything in your power to catch up on your payments. The intention is to spur a knee-jerk reaction from you by frightening you.

So what weapons do they have in their armoury?

In reality - not many - but what they do have they use to great effect:

If you end up in court before a judge because your Mortgage Lender has asked for a Repossession Order to be granted - in 95 out of 100 cases the order will be granted but suspended.

In other words, you will not lose your house.

Why is this?

The Borrower's Position

When you take out a mortgage it seems a very complicated process. This is not helped by the fact that you are borrowing more money than you have ever seen or are ever likely to see.

In fact, a mortgage is just a contract between you, the Borrower, and a Mortgage Lender. In essence, the contract says they will lend you a specified sum of money and you will pay it back. The contract will also detail the period of repayment and various other details, but the main content of the agreement is that they lend and you repay.

So what happens when you fall behind with your payments?

In legal terms, you have breached the terms of the contract. In other words you have failed to keep to the deal you originally made with the Mortgage Lender. At this point no-one is interested in the why, it is the fact that you have.

However ,you need to remember that the last thing your Mortgage Lender wants to do is repossess your property and there are remedies that the law can help you with.

The Repossession Process (Getting you to pay back the arrears!)

Normally the Mortgage Lender will write to you and tell you what you have to do to repay your arrears. Often they will ask you to catch up over the next six months or a year.

This is fine if you have fallen behind because there has been some error at the bank or simply because you have forgotten to make payments, but is often impossible if you have fallen into arrears because it is a struggle to make the regular payment, never mind a bigger one.

When you receive a letter like this the reaction is often despair, anger and frustration. You feel you want to hide from the problem and the last thing you want to do is talk to your Mortgage Lender.

This is a mistake as no matter how bad you feel when you receive these letters the one thing you must do is TALK TO YOUR MORTGAGE LENDER!

Remember the Mortgage Lender does not want to repossess your house, but if you do not communicate then some person just like you will get an alert on their computer that says they have not heard from you and they will move you on to the next stage in the process.

So phone them or write to them and say that you will get back to them in a couple of weeks with a plan to catch up on your payments. That ticks the box and normally nothing will happen for a few weeks.

Then WORK ON THE PLAN

Things you should know

Although the Mortgage Lender will say you have to repay over 6 months or a year - if that does not suit you, you do not have to.

If you want or need to, you can use the whole of the period of the contract to catch up on your payments. This is because of the outcome of a famous case at the Court of Appeal in 1995: Cheltenham & Gloucester Building Society v Christina Norgan:

Arrears on an agreement can be repaid over the full period of that agreement, a court not being obliged to set a shorter period.

So, if you have a 25 year mortgage (a 25 year contract), it may be possible to use the whole of that period to catch up on your payments. In theory, this means that if you are 5 years into your mortgage term and have 20 years to go, you can pay back the arrears over 240 months.

In practice, it is wise to pick a shorter period because if your first proposal for repayment is rejected then you can go back to the Mortgage Lender and offer a different deal over a longer period. So work out what you can comfortably afford to repay in the shortest period of time that is comfortable for you.

Reduce the cost of 'The Subscription'

Your mortgage payment is called 'The Subscription' and there may be things in it you do not need to renew.

The Subscription is the legal term covering ALL the various parts that make up your monthly payment. When most people take out their mortgages they are so grateful to get the loan that they do not look very carefully at all the other products the Mortgage Lender sells them at the time.

Often your Subscription will include payment for several other products. Some of these products may be unnecessarily expensive so ask your Mortgage Lender for a break down on your payments.

Items that can be included are:

It may be you can get these insurances cheaper elsewhere, so take a careful look at what you are paying for.

The Plan

As discussed earlier, most people get into arrears because another problem has meant that they have not been able to make their payments.

It is vital that you sort out this problem, or can identify a date in the future when the problem will be sorted.If you cannot realistically make the basic payments then you need to ask yourself some hard questions about the reality of staying in the property. Remember at this point you are in control of the equity in the property.

So, if for some reason your income has been cut or your partner has lost their job - try and work out when you can start making payments again and catch up on your arrears.

If you are having problems paying other bills such as your credit cards it is important to reduce the level of payment to an amount that leaves you with enough cash to pay your mortgage. You can even make token payments to your unsecured creditors in the short term to get the mortgage back up to date. You may be surprised at the number of people who have let their mortgage payments lapse as the unsecured creditors were chasing their payments more loudly!

However, you should also have a plan for the unsecured loans and if you've got lots of personal loans and credit cards it may well be worthwhile talking to someone at Payplan who can help you sort out this debt problem 0800 917 7823 as they see and advise on these kinds of debt problems on a daily basis.

In summary before you go back to the Mortgage Lender, you need to have a plan that you are comfortable with and can stick to.Then you will have no problem convincing the Mortgage Lender.Show them a copy of the income and expenditure you have worked out - this can work even at the court stage.

We are aware that it is very easy for us to make these suggestions and not so easy for you to carry them out.So if you need help call us and we will help you to put a plan together and put the deal to your Mortgage Lender.

Repossession Orders

Unless you are a very unusual person, appearing in court to defend a Repossession Order is a difficult experience. You will feel you are going into a world that you know nothing about with a group of people who know all the rules.

In fact, as mentioned before, the last thing the judge or the Mortgage Lender will want to do is to grant an order to repossess your house.

At this point, The Mortgage Lender will often say that they accept the offer but that they just wanted to ensure it was paid by taking it to court - this could be regarded as a waste of the court's time but it's used when unofficial plans have been set up and broken by the borrower before. Although the Repossession Order will be granted, it will be but suspended if you make the payments.

The only way repossession will happen is if:

  1. You have no hope of repaying your arrears.
  2. You have been to court before and proposed a deal and then failed to keep to it - and now you have no other deal to offer. This situation shows one of two things - you really do have no hope of paying the arrears or you did not prepare your offer carefully enough.
  3. You have not sorted out other financial problems and the judge does not believe you have a chance of catching up with your payments.

If you have to make a court appearance we can offer detailed advice on how to do so telephone us free on 0800 917 7819

You really must appear in person. Judges are generally fair-minded intelligent people who will want to help you if they can - but you have to show you are trying to help yourself. It also helps that if you have a plan to repay, you actually have the money to start making the payments that day.

Remember that a large number of properties get repossessed because the borrower was just too frightened to fight it, not because they could not afford to pay back the debt.

So the bottom line is HAVE A PLAN

Remember, it costs nothing to call Payplan on 0800 917 7819 or to submit your mortgage arrears and debt problem online. Our professional and experienced debt advisers are here to offer free debt advice on all debt issues.

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