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How to Stop Repossession

By: Louise Smith, barrister - Updated: 28 Aug 2010 | comments*Discuss
Repossession payments credit Report

There is much that borrowers can do to stop repossession. The most important thing is to take action as soon as it becomes clear that there are going to be problems maintaining payments. As soon as payments are missed this will start showing up on credit reports, limiting the options available.

Choosing a Mortgage

The first step to avoiding repossession is to make sure that the mortgage is affordable. Before signing a mortgage agreement borrowers should:
  • Prepare a proper budget so that they know exactly what they can afford.
  • Not assume that income will increase over the coming years.
  • Assume that interest rates will go up.
  • Make sure that they have read and understood the terms and conditions of the mortgage or loan they are considering.
Many borrowers rely on the advice of mortgage brokers. Brokers make their money through commissions paid when people enter into mortgages that they have recommended. Before signing any document people should make sure they have read and understood it.

Talking to Lenders

Mortgage lenders have a stated responsibility to assist borrowers if they face difficulties with their mortgage. Lenders will often be very accommodating if a borrower is going through real financial problems. Some lenders may even allow a payment holiday – a number of months when a borrower does not have to pay anything. Borrowers should approach their lender as soon as difficulties arise, preferably before payments are missed.

Making Payments

If arrears can be kept beneath a certain level (usually two months’ worth of instalments) lenders will generally not pursue a possession order - even once court proceedings have started. If the arrears are lower than the level required when a case comes to court, most lenders will ask for the case to be “adjourned generally with liberty to restore”. This means that the case is effectively put to sleep. The lender is entitled to ask for another hearing if the arrears build up again. This can happen repeatedly but costs will be added to the mortgage debt every time the case is re-listed.

Selling the Property

If a borrower cannot afford to maintain payments towards their mortgage there is nothing to stop them selling the property themselves. People are often reluctant to sell their home but this is a better option than having it repossessed and sold by the lender. Many lenders will not start repossession proceedings if they know that the borrower is in the process of selling the property.

Once a case comes to court most judges will give borrowers time to sell by granting a possession order for longer than the usual 28 days – a 56-day order is common. Judges may also postpone evictions if satisfied that the borrower is about to sell the property.


The approach of lenders and the courts to borrowers who are re-mortgaging is similar to their approach to borrowers who are selling. Many judges will happily give a borrower more time if they are shown evidence – such as a mortgage offer - that the borrower is in the process of re-mortgaging.

Opening a newspaper or doing a search on the internet will reveal that there are now many companies offering to provide re-mortgages to people who are already in arrears. Naturally these companies will charge a higher interest rate than other lenders. In the current economic climate it is likely that first-time buyers and people with bad credit ratings will find it increasingly difficult to get mortgages.

Getting a Loan to Clear the Arrears

Taking out a loan to clear the arrears on the mortgage may seem like an easier option than re-mortgaging. However, the borrower will then have to pay the monthly instalments on both the mortgage and the loan. If a borrower obtains a secured loan, and fails to maintain payments, the loan company will be entitled to start repossession proceedings. This is often only a short-term solution.

Other Options

There are companies who offer to buy properties quickly so that repossession can be avoided. In some instances the borrower may stay in the property as a tenant. Some companies will pay a borrower a lump sum to clear the arrears, help the borrower to sell the property through agents and then take a percentage of the equity when it is sold. Both of these options will result in a borrower selling their home for substantially below the market value.


Borrowers should take action as soon as problems become apparent. This will maximise the options available: the more options available, the greater the likelihood that repossession can be avoided.

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