It is not uncommon for a responsible mortgage payer to occasionally miss a monthly repayment. But at what point does the odd missed payment escalate into arrears, bringing with it the threat of repossession?
More importantly, what can you do to prevent repossession from becoming a reality if you fall behind on your mortgage payments?
By definition, you are in arrears the moment you miss the deadline for a single mortgage payment. This means you have overdue payments on your property and are therefore in arrears.
However, many lenders have their own unique policies with regard to late payments. Some give their customers a week or two following the agreed payment date to make their repayment, during which they will not impose fees or penalties.
For more information on bridging loans to prevent property repossessions or to discuss any of our products in more detail, contact a member of the team at bridgingfinance.com today.
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The formal definition of arrears is therefore open to interpretation, but most banks follow similar principles where repossession proceedings are concerned. Typically, an initial warning of intent to repossess will be issued when a customer fails to make three consecutive mortgage payments.
But as most lenders would prefer to avoid repossession becoming necessary, communication with your bank when facing financial difficulties can help bring about an amicable resolution.
Repossession is a long, complicated, and costly process, which all lenders would prefer to avoid. Long before your home is repossessed, you will be sent one or more official warnings of your bank's intent by post. Even at this late stage, it may still be possible to reach an agreement with your lender and prevent the repossession from going ahead. But if you ignore your lender's letters and/or find yourself in a position where you simply cannot pay, your bank will issue a request to the courts for permission to repossess your home. You will then be summoned to a hearing, where you will have the opportunity to plead your case before the courts.
Based on the information provided, the court will then reach one of four decisions:
As it is comparatively rare for the courts to rule in favour of the debtor, it is better not to allow things to escalate to such a level in the first place.
Affordable bridging finance can be one of the most cost-effective ways to prevent repossession from going ahead. With bridging finance, you gain the freedom to sell your home on your own terms, repay your outstanding mortgage balance, retain any subsequent profits, and protect your credit score. As repossessed homes are typically sold for significantly less than their true market value, it is an eventuality best avoided at all costs.
Again, the preferable option is to prevent repossession from becoming necessary in the first place. Oftentimes, simply communicating with your lender the moment you encounter financial difficulties can be enough to bring the issue to an amicable resolution. But where all other options have been explored and repossession appears inevitable, an affordable bridging loan could be just the thing.
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