Top ten house repossession tips

House repossessions hit a 12-year high in 2008, with over 200,000 home owners more than three months in arrears with their mortgages. If you want to avoid mortgage debt or house repossession, consider the following ten tips:

1. Flexible mortgage terms

Make sure you understand your mortgage terms to avoid debt problems later on. Most mortgages have some flexibility built in, so if you pay any extra in advance, you should be able to pay a reduced mortgage when things are difficult financially, or you may even be able to take a payment break.

2. Check the benefits you can claim

If you are unemployed and suffering debt problems or seeking debt advice in the UK, you should make sure you are getting the benefits you are entitled to. Also check if you have been paying mortgage payment protection insurance which could cover your mortgage payments for up to a year. If you have been mis-sold payment protection insurance you can reclaim the money paid with the help of a debt advice company. Also check with your benefits office to see if you are entitled to any help from the government with your mortgage repayments.

3. Check your budget before contacting your lender

Draw up a budget and note all of your outgoings and income before you contact your mortgage lender. Use an online mortgage calculator or online budget calculator to help you. If you are in need of free debt advice or information about debt management plans or individual voluntary arrangements, you should contact a regulated debt solutions company.

4. Face up to your mortgage debts

Keep in touch with your mortgage lender, and never ignore letters or phone calls. There are several options available to you if you are having problems paying your mortgage, or if you are suffering serious debt problems. The longer you leave it, the less sympathetic your lender will be, so act quickly when your debt problems start or you miss the first mortgage payment.

5. Consider your mortgage options to stay out of debt

Your mortgage lender may be able to offer you low cost alternatives to your current mortgage, such as reduced monthly payments for a set period of time or extending the term of your loan. You may even be able to take a mortgage payment holiday if your lender agrees to it. Address your debt problems as quickly as you can, or serious debt problems could follow. Debt advice is free in the UK with regulated debt help companies.

6. Mortgage arrears fears

If you fall into mortgage arrears, contact your lender immediately. If you have missed a couple of payments and you receive a letter from your lender, respond to it as quickly as possible. By failing to reply, you will be more likely to suffer house repossession. Always try to negotiate with your lender before they start legal action. You have nothing to lose by speaking directly to your lender.

7. House repossession and keys

Don´t hand the keys back to the lender and walk away. You will still not be free of debt. Seek independent advice first from a regulated debt company. Your debt problems could get worse and your name will appear on the mortgage repossessions register if your house is repossessed, which could affect any mortgage application in the future. If you can sell the house, then do so. Remember that if the house is repossessed and sold at auction, if there is any shortfall before the price it reaches and the money you owe, you will still be liable to pay that sum back. The lenders legally have 12 years to get the money back from you.

8. Mortgage court case

If the case against you goes to court and you don´t come to an agreement with the lender, make sure you turn up. The lender is likely to be at court to try and get an order of possession, but if you present an acceptable offer to repay your mortgage arrears, proceedings could be stopped by the judge. If you can´t afford to pay the full amount back, then make a reasonable offer to clear your mortgage arrears, and you may be in luck.

9. Your rights and the bailiffs

Bailiffs have to give you seven days to vacate your premises and can use reasonable force to enter the premises. Remember that the lender may have the legal right to repossess the house, but not the contents, so an agreement must be reached with them as to when you can collect your goods.

10. Beware sell to let schemes

Schemes which offer to buy your house and rent it back to you can leave you with serious debt problems. Always read the small print and make sure you can afford the rent. You could end up being evicted if you default on the rent payments. Smelling desperation, sell to let companies will also be offer you a price which is far less than your house is worth.