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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: 13th March 2020 *

What can you do if you’re going through a credit crunch and you’re at risk of losing your home to your mortgage lender? If you’ve fallen into arrears on your mortgage repayment, taking a proactive stance is often the best way forward. This could involve carefully working through your financial situation, contacting parties involved, and speaking to an expert financial advisor.

The good news is that for homeowners 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 keep up with mortgage repayment, a little renegotiation could be all that’s needed to avoid repossession. -  Read on to learn about the criteria assessment for repossession rescue:

If you’d like to get expert advice on your situation right away, call 0808 189 2301 or make a quick online enquiry. We'll match you with an advisor experienced in successfully dealing with similar cases.

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What is repossession rescue finance?

Finance to save someone from repossession typically entails a short-term arrangement by way of a full remortgage,  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.

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.

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

The advisors we work with are all whole-of-market with access to mortgage lenders across the UK, they’ll know the best lenders to talk to about how to avoid repossession.

How much do you owe and how far into arrears are you?

Take stock of your situation and consider how far in arrears you are. Even if you’re past two months in arrears and have received a court order for repossession of the property, this doesn’t mean losing your home is inevitable. 

Applicants who are one month behind are of course, in a much better position to avoid repossession than those in six+ 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 (LTV)), and comes with higher fees and rates of interest.

If you have questions about whether a repossession rescue is possible in your situation, it’s well worth speaking to an expert refinance mortgage broker. An expert who is well versed in all possible solutions can help you understand your best options.

Do you have enough equity to avoid repossession?

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:

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

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. 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 a far lower 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.

Do you have any other debts?

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

So if a borrower is looking to refinance to avoid repossession there's usually a requirement for additional money to clear other debts.

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

Mortgage lenders will take the reason for your late repayments into consideration. You may have been with an unexpected emergency that’s left you momentarily out of pocket. 

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

It's often a major life event such as prolonged time off work, increased outgoings or reduced income which led to difficulties in keeping up with mortgage payments.

If lenders can see 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. But borrowers who simply overspent and mismanaged their money would be cut less slack.

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 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.

Is your income stable and will the new repayments be affordable

Our income and ability to afford the repayments is a key criteria lenders will look at when assessing your eligibility for a repossession rescue

If you have enough 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.

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 the likelihood of a repeat occurrence?
  • If the issues were down to illness, has the borrower now made a full recovery and are they back at work full time?

If the income is deemed reliable, lenders will run their affordability assessment. Each lender has their own interpretation of what counts as 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 4-4.5x income, although there are currently a handful of lenders considering up to 5-6x income in certain circumstances. 

If you’re unsure of which lender would assess your income more favourably, it’s best to speak to an expert mortgage rescue advisor. 

Get in touch to find out more about the best ways to avoid repossession.

Is the property suitable?

Property type and condition could also play a role in whether you could successfully refinance your home.

 Lenders will each have a different policy on what they deem suitable, though structurally sound traditional brick built property is generally accepted by all lenders. 

However, if the property is in need of repair or is of non-standard construction such as a concrete build or timber frame, then the number of lenders willing to consider an application can be limited.

Make an enquiry to be connected to a repossession rescue expert who can talk you through any queries you may have about property type. They’ll help you find any possible solutions to avoid repossession and take back control of your financial situation.

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

There are two options you could take to safeguard your property and avoid repossession in troubled times. The first is to talk with your lender to see if you can come to some arrangement, and the second is to sell your property instead of repossession. For more information about these two options, see our sections below.

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.

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 also be achieved by talking to your lender.

Some mortgage lenders can be very difficult to deal with directly, but an expert negotiating on your behalf can help ease the immediate pressure off the situation.

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 you’ve been declined new finance,  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 the 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. 

Even if you’re between a rock and a hard place, a mortgage advisor will give you the peace of knowing you did all that you could to avoid repossession.

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

Updated: 13th March 2020
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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.