What To Do When Your Home Is Being Repossessed?

Notice Periods – Time To Run Through Your Options

First Published: ADawnJournal.com January 24, 2010

When you are having trouble paying your mortgage, the inevitable spectre of repossession emerges. Financial hardship is awful for anyone. The knowledge that you could be unemployed and not knowing where the next month’s groceries are coming from is bad enough, but when you have to deal with the idea that the roof over your head could be taken away from you things become worse still. Nobody who has experienced the situation of being repossessed, or even under threat of repossession, can ever take the payment of their mortgage lightly. The mere thought of having to move out of a home that you have made your own is too much.

However, there is a process that needs to run its course before a house can be repossessed, and if you work together with the bank who supply your mortgage then there are still options which could mean that you can escape the danger of repossession. The important thing of which you must take account is that banks generally do not want to foreclose on a house. As valuable as a house may be, and as keen as they are to protect their investment, banks set a lot of store by customer co-operation. With other forms of debt, specifically unsecured debts, one of the banks’ main fears is that customers will duck and run, leaving no trace of their whereabouts. With a mortgage, the loan is tied to the house, so the chance of a customer sneaking off with the proceeds of their non-payment is removed.

A policy of co-operation with the bank will serve you well in this respect. Rather than take the house off you, renovate any part that they consider not to be up to scratch and put it back on the market at a lower price to force a sale – all of which leaves them out of pocket – they would rather agree with a customer to refinance the mortgage to a more manageable level, creating in effect a new mortgage with a full term. You may stay indebted to the bank for longer, but you also stay in the house. If you cannot agree a remortgage or fail to make the payments, then the bank will be more likely to repossess. If they do this, they must however give a notice period.

During the course of your notice period, you have two options of any real substance. You can start looking for rental properties in preparation for the house being repossessed by the bank at the end of the stipulated period (either 35 or 45 days) or you can look for one last way to make the situation good. This may include looking elsewhere for a mortgage – which you will then use to pay off the old mortgage in full and begin to pay off anew. If you are able to demonstrate either the completion of this process or its reaching an advanced stage, the notice period can be extended or quashed, allowing you to make a new start and remain in the home you have made.