In the event that you end up having a number of unpaid repayments on file for your property such as defaulting on mortgage or loan payments that have been secured on your home, you risk receiving a repossession order from your lender. If you acquired the loan in question from a broker or intermediary, the repossession order will not come from them.
The repossession order will ultimately come from the end-lender that you borrowed the money from originally, which can result in you losing the home you live in. But how should you act if you receive one and what are the consequences of receiving such an order?
If you are in a position to be serving a repossession order or arranging for its serving to a homeowner you will need to remember that although you may be on the way to recouping your losses, there will be other fees for you to bear in mind. These include things like legal fees, court fees and the property security once the notice is served.
How to avoid repossession in the first place
The idea of potentially losing our home is something that many of us greatly fear, so what ways in which can you reduce the likelihood of ending up in a situation where your home is repossessed? Here are our top tips:
- Don’t avoid letters that you receive from a loan provider or mortgage lender out of fear. The earlier you act, the more time you have to find a solution to your problem without it spiralling out of control.
- Contact your lender as soon as possible if you are having problem with repayments.
- Get free money advice at an early stage to help you deal with financial problems that you are experiencing.
Being more efficient with spending
One of the best ways to avoid the risk of repossession orders altogether is to be better and more efficient with your outgoings and what you spend money on. This way, you will send less and have more available to be prioritised to be spent on clearing any outstanding debts you may have. Undertaking some simple practices could save you quite a bit of money. Interestingly, you can still enjoy some non-essential pleasures whilst saving money too.
For example, if you are an avid gym-goer, unless you have specific dietary needs, consider swapping vegan protein supplements for whey substitutes which may be cheaper. When buying ice cream, buy in bulk and store it in your freezer, rather than buying single items. Rather than buying crafted coffees when you are out, consider buying a slightly better instant coffee and making that for yourself in an insulated cup at home for when you are on the go.
The repossession order process
It isn’t the case that the lender can simply put forward an application to evict you through a repossession order whenever they please. There are a number of rules that the lender has to abide by before taking this step, as it is meant to be a last resort.
They need to have attempted to discuss your financial situation with you beforehand, as well as give you the opportunity to pay off your arrears within a period of time.
It may well be possible for you to remain in your property despite receiving an order. For example, if you are able to promptly pay ongoing mortgage repayments, or manage to pay off outstanding arrears over a designated amount of time, then the court may suspend the order.
Types of repossession orders
The lender has the ability to repossess your property if you have a number missed payments on file under a specific set of circumstances and you should remember that the lender only has the ability to repossess your property in the event that the court has granted them permission to do so.
There are three scenarios that are most likely to occur; The judge could make the repossession order, adjourn the hearing, or set aside the case completely. There are also different types repossession orders that you could end up receiving if the judge decides to go ahead with the lender’s case:
Suspended possession order – If you receive this, it means that providing that you make the payments that have been outlined in the order, you will be able to remain in the property. If you do not keep to this payment schedule, you may be evicted.
Outright possession order – Also occasionally known as an ‘order for possession,’ this type of order gives the lender who is owed money the legal right to take possession of your property on the date stipulated in the order. In most cases, this will be about 28 days after the court hearing. If you decide to stay put beyond the date in the repossession order, it is possible for your lender to evict you.
Possession order with money judgement
With this kind of order, a money judgement is added to the order which you will need to pay off as the lender has legal right to instruct the court to carry out the judgement and order. In terms of what the money judgement consists of, it usually includes the following fees:
- The legal cost of your lender.
- Court fees.
- The mortgage arrears outstanding.
Nevertheless, there are a certain set of circumstances in which a money judgement is not applicable to your situation. For example:
- The lender has sold your home, and the sale price has ended up being more than the amount that has been stated in the money judgement.
- You have paid the mortgage arrears stated in suspended order.
You may receive a money order, which will require you to pay the stated amount in the order that the lender has requested. If you do not do this, then it may be the case that a bailiff removes items from your home, or deducts money from your wages or bank account to the value owed.
Nevertheless, it is worth noting that a lender cannot use a money order alone to repossess your home. These are designed for if you continue to fail to make payments; only then may they decide to go to court again and in these cases the judge may give them a possession order on the next occasion.