Mortgages - how long before repossession?

daveshoelace

Hi all,

I will soon be buying my first house and I wanted to prepare for every eventuality.

My main concern is how soon would a mortgage lender wait before threatening to repossess the home? After a missed payment? After several?

Not only this, under these circumstances do they offer any deals such as offering to buy your home at a reduced rate?

None of these situations I ever see arising as I have never been late paying anything in my life, but as I am about to put my life savings into the deposit, I want to understand the risks involved.

Thanks in advance

opinions4u

You would normally have to be at least two months in arrears before they even considered it. Miss two payments but then pay £1 and you're less than two months in arrears.

But it would typically take 6-12 months to actually get to the point of no return. Clear the arrears in full within that time and you keep your house. Other negotiated compromises or court agreements can also come in to play.

Different lenders behave in different ways though. Some are more helpful than others. But sooner or later they will move to the end game if the position is deteriorating.

A good financial plan, starting with a contingency fund in an easy access savings account of 3-6 months net pay, can significantly reduce the risk of ever being in arrears.

daveshoelace

Thanks very much, I assumed it would be much more severe than that, it really takes the pressure off.

My biggest fear was because I am self employed, now and then my own income can come in late and I worried there would be no wiggle room.

mrsrwallace

daveshoelace, i can say that in our situation we are about 6 months in arrears with our mortgage company. My OH was self-employed like you and we NEVER missed a payment EVER in our lives until his work dried up. He is working again but on a very low income in comparison to his previous earnings and we cannot afford our full monthly mortgage payment.

Our mortgage company DID let us pay a smaller amount for the first 3 months so we were at least paying something but arrears were building. After the initial 3 months arrangement ended they refused our proposal to keep paying this lower amount but did say they would consider us selling our property (we are in negative equity) and so we've had our house on the market for just over 2 months now, we had a sale but it fell through. I don't honestly know how long they will let us sit in this situation before they repossess - at times I wish they would do it and get it over with then at other times I wish our income would improve and we could catch up and pay the arrears etc.

It all depends on the mortgage lender, it is true that the last thing they want is to repossess as they usually stand to gain more with you paying the mortgage BUT it is also true that they will not let the situation go on for too long. I admire your optimism in that you cannot foresee any problems in paying your mortgage but we were like you once and the worst did happen.

bigadaj

Don't wish for them to repossess as they will sell for whatever they can get and the difference will still be your liability for twelve years.

OP, the key to avoid this is not to stretch yourself and also build up a cash fund of a few months wages or expenses should times turn tough.

Thrugelmir

daveshoelace wrote: »

My biggest fear was because I am self employed, now and then my own income can come in late and I worried there would be no wiggle room.

Then don't over commit. Buy what you can comfortably afford. So that the situation doesn't arise.