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Freeholders - mortgage repossession for freeholders
introduction
This section is intended to introduce some of the issues that relate to mortgage repossessions. The crucial point to remember is that if you do not keep up your mortgage payments, the lender may eventually be able to evict you and sell the property to get its money back. As a rule, lenders do not want to evict occupants. After all, they make money from receiving interest over many years. However, sometimes they will still make the decision to repossess. If you are in danger of losing your home you should seek full legal and financial advice immediately. Equally you should consider taking early advice in the event that you get into difficulty over your mortgage repayments.
summary of the law
If you are in arrears, you must contact your lender immediately. It might be possible to negotiate a fresh repayment scheme. Most lenders are sympathetic to personal difficulties, provided you are honest with them. If you ignore letters sent by the lender, you will eventually be served with a county court claim (usually three to six months after the arrears started). This form signifies that legal proceedings to repossess your home have commenced. At the subsequent court hearing, your lender will explain to the judge that your arrears amount to a breach of covenant (a promise) to maintain payments. If the judge agrees, he will grant the lender possession. That means you must leave the dwelling by a set date. Thereafter, your home will be sold to repay the mortgage. If the sale does not cover all the expenses (outstanding mortgage, arrears, legal and administrative costs, bailiffs) you will remain personally liable to the lender for such sums.
possible actions
There is much you can do to save your home. Do not simply hand in your keys to the lender. Interest continues to accrue right until the time your debt is cleared. Instead, you should draw up a financial statement. This should specify all your income and expenditure. Include wages, part-time, casual work and benefits. Deduct outgoings such as council tax, car and children expenses. From this you will be able to calculate how much you can pay your lender each month.
You could ask to repay the arrears over the remaining term of your mortgage. You might also ask for permission to take in a lodger (most mortgages prohibit lodgers without prior consent). You can earn up to £4250p.a. from your lodger without having to pay tax on that income.
If you can at least show an effort to make regular payments (or that your finances are about to improve) your lender should be receptive. They cannot expect you to pay everything in one lump sum. Even if your lender takes legal action, the situation is still not hopeless. The courts are loath to make people homeless, especially if dependent children are involved. Possession is ordered only in the most hopeless cases, where a borrower has made no effort to remedy the situation. In most cases, judges will analyse your financial statement and suggest that you pay £X per month to your lender (part repayment / part towards the arrears). And provided you stick to that agreement, the court is very unlikely to order possession against you in the future.
Even if possession is ordered, you can still ask the court for permission to sell the property yourself. During this time you can remain in occupation and by selling on the open market you might fetch a higher price than your lender could.
That said, in cases such of these where you are in danger of losing your home, you should seek full legal and financial advice as soon as possible.
More free legal advice from freelawyer.co.uk
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