Repossession - how long does it take?

SuzySu

As the title says, how long does repossession usually take? We have been trying to sell our house and this weekend past, our buyers have decided to reduce their offer still further which will take us into negative equity. We were at the point of signing contracts....

Our mortgage co has also decided to add £540 per month for 6 months to clear our arrears, taking our mortgage alone to £2088. We also have a second charge on the property which costs us £450 per month. We just can't afford to keep paying this sort of money SO.....

If we stopped paying the mortgage and second charge and saved for a place to rent, what would the next step be for the mortgage co and second charge? Presumably they would start repossession proceedings, but how long would we have before they actually took the property away from us?

I presume we would need to find 6 months' rent up front as our credit is shot to pieces, and a 3-bed place here is anything from £800 to £1100 per month.

Any advice gratefully received as ever....

silvercar

I doubt they would take you to court before there are 3-4 months of missed payments.

Negotiate with the secured loan company, remind them that repossession will mean that they get even less money. Try and persuade them that they would be better off by allowing the sale to proceed and taking an unsecured loan for the amount not cleared by the sale.

The second charge company are less likely to repossess if they understand that they will bear the costs of the repossession but may well not see money from the sale. For this reason you could maintain the mortgage payment for longer than the secnd charge payment.

SuzySu

Thanks Silvercar......the secured co cannot agree to this without speaking to their external lenders and this will take time as we need to supply a truckload of supporting documentation.

What are the benefits of just paying the mortgage rather than mortgage AND secured loan? Do I understand you correctly in that the company that goes for repossession pays for it? Don't they pass the solicitors' fees and court fees etc onto us?

clutton_2

have alook at www.ridingtherhino.co.uk - its a debt forum and there is a lot of really useful info on there re repossession.

legally a lender can take you to court if you are two months in arrears - they rarely do that.

once they have taken you to court - if you do not turn up and fight your corner, its a two minute hearing, and the judge will in all probability give you 28 days to leave.

i f you dont leave them, the lender goes back to court to ask for a bailiffs warrant and they turn up and hoik you out - locking your stuff inside.

if you are going to ask the local authority to rehouse you - you MUST stay in the house after the 28 period, then take the court possession order to the council and they may have to rehouse you (only if you have children)

if you leave prior to receiving the court possession order, you will be deemed as "having made yourself voluntarily homeless" and the local authority will not rehouse you.

ALL the fees of repossession will be passed onto you - do read the terms and conditions of your lender - as these fees will amount to a considerable sum.

silvercar

What are the benefits of just paying the mortgage rather than mortgage AND secured loan? Do I understand you correctly in that the company that goes for repossession pays for it? Don't they pass the solicitors' fees and court fees etc onto us?

They would pass all fees and costs to you eventually. But if they know you are in arrears they know you don't have a pot of gold to pay these fees.

Their risk is that they incur repossession costs and fees, sell the property and the proceeds of sale go first to clear the main mortgage. If there is nothing left over they will not get their money back on the costs incurred. So they have to decide if it is worth the financial risk in paying out for the repossession. If they understand the issues they may well decide to wait until the main mortgage holder repossesses and hope there is money left over to pay them. This latter strategy means they could recoup some of the loan without incurring costs to do so.

Thanks Silvercar......the secured co cannot agree to this without speaking to their external lenders and this will take time as we need to supply a truckload of supporting documentation.

So they understand that it may not be worth them taking action. Supply whatever they need. Recent valuations, similar sold prices etc.

The only advantage in paying the mortgage without paying the secured loan, is that it gives you more time to save a rental deposit or to be in the home, when you know the secured loan company are unlikely to benefit from repossessing you.

You are right in that all the costs will end up in your lap eventually - this is just a delay tactic.

Premier_2

If you fail to pay the mortgage repayments (or other loan repayments secured on the property), the amount owed will be added to the current debt and you'll be charged interest on that too.

If you allow the house to be re-possessed, you'll end up with all the legal and admin charges associated with that too. Bailiffs don't come cheap either, and they will arrive, park outside your property in full sight of the neighbours, and with will repossess the property and charge you the locksmiths charges for changing the locks to ensure you can't re-enter.

Finally, your house will probably be sold at a pittance. Although there is a requirement to sell the property at the highest achievable price, this has to be balanced against the charges that will amount by a slow completion and/or a potential buyer pulling out. (So the property may be sold for less to a cash purchaser who may not be willing to pay so much but will complete very quickly) All these charges will be passed onto you.

If the sale value of the property does not cover your debts, the lenders will still pursue you for the outstanding debt ... perhaps for many years to come!

In my experience, those lenders who take a second charge on your property have very little sympathy for those who borrow money from them and don't pay them back. Bankruptcy can be forced on those owing as little as £750.

Probably best to try and sell your house yourself for the highest amount possible - even if that does mean you sell for less than the amounts borrowed. Whats worse than owing a bit of money? Answer: Owing a whole lot more!

With regards renting privately, you might find a naive LL to accept 6 months adavance rent ilo deposit and references. But many know just how long it takes to evict a tenant and the costs involved. They also are aware of just how short a time many thousands or tens of thousands of pounds damage can be done by tenants. 6 months rent in advance may cover the rent for 6 months but the LL would have little chance in recovering any other money that may end up owing - that's why LLs like tenants with secure, permanent employment and large disposable incomes - they can apply to the courts for an attachment of earnings in the case money is owed and not repaid.

SuzySu

Premier wrote: »

Probably best to try and sell your house yourself for the highest amount possible - even if that does mean you sell for less than the amounts borrowed. Whats worse than owing a bit of money? Answer: Owing a whole lot more!

I agree, but it is out of our hands. We would be willing to sell with a shortfall of £9000 and owe this to the second charge. However, we would still fail a credit check and have no-one who can act as guarantor so it looks like we are up a famous creek without a paddle as we could not raise the extra 6 months rent anyway.

clutton_2

""Probably best to try and sell your house yourself for the highest amount possible - even if that does mean you sell for less than the amounts borrowed.""

it is extremely unlikely that a lender will allow this - they will often take a property to auction at this point - but nowadays they will almost certainly be guaranteed to get even less at auction - so you are between a rock and a hard place i;m afraid.

Premier_2

clutton wrote: »

""Probably best to try and sell your house yourself for the highest amount possible - even if that does mean you sell for less than the amounts borrowed.""

it is extremely unlikely that a lender will allow this - they will often take a property to auction at this point - but nowadays they will almost certainly be guaranteed to get even less at auction - so you are between a rock and a hard place i;m afraid.

A lender cannot take a property to auction without a court order. It's unlikely they would get such a court order if the judge was aware that the owner had tried to sell it, but was blocked by the lender so that the lender could sell it at auction...as you say for probably a lower price.

Even if the lender doesn't want to comply with their obligations to mitigate any loss for the borrower, the court will act to make sure they do.