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Repossession Rescue

Find out how repossession finance could safeguard your home

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 27th August 2019 *

For homeowners currently behind on their repayments (in arrears) and facing repossession, there may well be lenders who will consider a refinance application, depending on several key criteria.

If you're facing financial difficulties and struggling to pay your mortgage, a repossession rescue could be the best way to avoid repossession of your home.

In this article we'll take a closer look at the criteria for a repossession rescue and how to avoid the repossession of your home. 

Read on to learn about the criteria assessment for repossession rescue, including:

If you want to save time reading, why not talk to someone about your own situation and get direct advice about what options may be possible for you.

The advisors we work with are all whole-of-market with access to mortgage lenders across the UK, so are well-placed to know the best lenders to talk to about repossession rescues.

Call 0808 189 2301 or make a quick online enquiry and we'll match you with an advisor experienced in successfully dealing with similar cases.

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It’s important to remember that every lender is different in what they do and don’t accept, so if you have been turned down by your own bank, or been declined elsewhere, it doesn’t mean there aren’t any other options.

Finance to rescue someone from repossession typically entails a short-term arrangement by way of a full remortgage or second mortgage (or bridging loan), that is used to free up equity to repay arrears and other debts.

Once your credit file has recovered enough for you to be eligible for better terms elsewhere, this arrangement is then refinanced for a better deal.

To establish if you’re eligible, make an enquiry and we’ll refer you on to one of the specialists we work with.

How much you owe and how many months you are in arrears?

Applicants who are one month behind are, of course, in a much better position than those in 6+ months of arrears, and as a result are likely to have a higher number of available lenders to choose from.

Being further behind on payments makes you more of a risk to new lenders, which limits your options and usually requires more equity (a lower loan to value ratio, or LTV), and comes with higher fees and rates of interest.

How much equity you have in the property

Most UK lenders considering a ‘repossession rescue’ mortgage would require a decent amount of equity in the property. There are two key reasons for this:

  1. So they can release funds to pay off outstanding debts.
  2. As security on top of what is borrowed to protect the lender against the risk of default.

Clean credit borrowers with no arrears can potentially borrow up to 95% loan to value (LTV), but those with mortgage arrears are likely to be limited to far lower LTV. The deal you can achieve will depend on the number of months arrears and the rest of your credit profile.

Lenders view borrowers with more equity, say 50%, as a lower risk than borrowers looking for 80% LTV.

NOTE: Non-equity loans can potentially be lent up to and over 120% loan to value (LTV), but these are at extremely high rates and should only really be considered as short-term, last resort borrowing.

If you have any other debt with payments late, missed, in arrangement, or in default

If your mortgage is in arrears, it’s common to also have other debts. Since most people treat the roof over their heads with upmost importance, the mortgage is often the last thing people stop paying when faced with financial difficulties. 

Therefore, if a borrower is looking to refinance to clear up mortgage arrears there's usually a requirement for additional money to clear other debts.

The state of your overall credit report and payment conduct of other accounts will all be taken into account in the lending assessment.

Multiple accounts (credit cards, loans etc) in arrears or in default can make refinancing even more difficult as the new lenders will need to see evidence that offering a new mortgage is responsible on their part.

The reason for the arrears and your current situation

If there is a plausible and understandable explanation for the situation, then a new lender may be able to take exception and offer finance that may typically be outside of their policy.

For many it's often a major life event such as  prolonged time off work, increased outgoings or reduced income with in turn led difficulties maintaining mortgage payments.

If lenders can see that the situation was clearly due to unforeseen circumstances and was a one-off event that is now under control, they're likely to be more flexible and understanding than if assessing borrowers who simply overspent with a disregard to financial management.

An example of this may be a single person who suffered an illness and was unable to work but is now back on their feet; or perhaps a couple with a joint mortgage where both incomes are required, and one of them was made redundant for several months but now has a new job.

Ideally, lenders are looking for a clearly defined one-off event, that is now remedied.

If you have sufficient income to support a refinance lenders can consider a tidy up of all outstanding debt, consolidating it into one loan secured on your property as a second mortgage. Where appropriate, most lenders will also consider stretching the term to reduce monthly payments.

Is your income stable and will the new repayments be affordable

A huge part of the assessment a new lender will make when assessing you for a repossession rescue is your income and ability to afford the repayments.

Lenders will look at things like:

  • If credit issues were down to redundancy, is the applicant now in a stable job?
  • What are the long term prospects of the role and likelihood of a repeat occurrence?
  • If the issues were down to illness, has the borrower now made a full recovery and back at work full time?

Assuming the income is deemed reliable, lenders will each run their own affordability assessment based on their interpretation of the acceptable usable income (for example, some lenders don’t accept bonuses or commissions, others will accept 100% of them).

Most lenders run an affordability based model and this can result in maximum loans of 3-5x income, although there are currently (at time of writing) a handful of lenders considering up to 6x income in certain circumstances.

Is the property suitable

Property type is a factor for all borrowers, where lenders will each have a different policy on what they deem suitable. Traditional brick built property is generally accepted by all lenders so long as it's habitable and structurally sound.

If the property is in need of repair or is of non-standard construction (i.e. concrete build, timber frame etc) then the number of lenders willing to consider an application can be limited.

Talk to an expert about whether you could get a repossession rescue mortgage on 0808 189 2301. We'll match you with one of the expert mortgage brokers we work with. 

They will be able to answer all your questions and help you find a solution to your problems. The service is free, there's no obligation and there won't be a mark on your credit score.

How to avoid repossession of your home

Many of our customers want to know how to avoid a house repossession if they are late on payments. There are a number of steps you could take to safeguard your property in troubled times:

  1. Talk to your lender Many borrowers have access to additional facilities within their mortgage that they aren’t aware of, such as payment holidays (option to take several months off from paying the mortgage), drawdown of overpayments, or an arrangement to extend the mortgage term  to lower repayments, which can be invaluable in times of financial difficulty.
  2. Remember, it's in a lender's interest to do all they can to avoid repossessing a property, so you should expect a degree of flexibility. If you need to borrow more cash to clear off arrears and would also benefit from additional equity to consolidate debt, then this could be also achieved by talking to your lender.
  3. Sell your property - if you have tried all other options and still can’t get into a position where you’re able to make payments, and have been declined new finance, then it may be time to think about selling the property. In the long run this is likely to be a better option for you than going through a formal repossession processes.
    Avoiding a formal repossession will probably be more likely to give you some control over how much money you get for the property and allow you enough time to find and arrange renting somewhere else to live.
    Taking control and selling your property means that, technically, you haven’t defaulted on the mortgage and it isn’t a repossession. However, if you have defaulted it would be viewed as a repossession by new lenders in future, even if you sell the property privately.

Speak to a repossession rescue expert

For more advice about how to save your house from repossession, call 0808 189 2301 or make a quick online enquiry.

We will match you with one of the experts we work with. They will be happy to answer all your questions and discuss all of your available options. If it's the right option for you, they will work to connect you with a lender offering a ‘rescue’ mortgage that could help you avoid repossession.

We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 27th August 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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