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Repossession and how to avoid it

If you're struggling to pay your mortgage, it's essential to stay focused on what's most important:
Speak to your lender as soon as possible to explain your situation – you may be able to negotiate terms which will allow you to keep your home.
See if your lender will allow you to:
take a temporary payment holiday
add your arrears to your mortgage loan, this is known as capitalising your arrears
pay off your arrears in installments.
Your lender may agree to extend your mortgage term – this will allow you to make your payments over a longer period of time and will reduce your monthly repayments. But it will also increase the amount you have to repay in the long-run
Rent out the property – if you can, and rent somewhere cheaper. However, there is likely to be a term in your mortgage agreement preventing you doing this unless you get permission from your lender, which they may be unlikely to give. Another option could be to rent out a room in your home
Sell the property - if it is possible to sell the property to pay off the debt, this might be an option for you
Change your type of mortgage – you might be able to switch to an interest only mortgage. This may reduce your monthly payments but it is only worth doing this if you are able to manage these new payments
Turn up to court – if your case goes to court make sure that you turn up – even if you think that your situation is hopeless, you may still be able to save your home
Do not just hand in keys - This will not solve your financial problems, you will still be liable for the mortgage until your home has been sold, or any shortfall repaid
See if you are entitled to any benefits which may help you, such as support for mortgage interest. And avoid borrowing more money if you can, as this may only make your problems worse
Get legal advice – make sure that you seek advice well before you have to go to court. This will allow you to prepare for your case, and look at your finances in detail. Contact Walsall Council on 01922 653405 to find face-to-face housing advice services in your area.

If you have not been able to prepare for your case in advance, a duty advice scheme operates in most courts, where advisers are able to offer you free representation. Make sure you turn up early to court, and bring all relevant documents with you – such as correspondence with your lender, and details of your income, which you will need to show in order to show the court what you can pay.
(Shelter 2010)


Mortgage repossession scheme
Government schemes could give you mortgage help to stop repossession.  
There are a number of government schemes that may be able to help if you're struggling with your mortgage.  
Support for mortgage interest
Support for mortgage interest (SMI) is aimed at homeowners on certain income-based benefits, such as income support or income-based jobseeker’s allowance.
It is paid to your mortgage lender by the government 13 weeks after you claim and covers interest due on the first £200,000 of your mortgage at the Bank of England’s published monthly average mortgage interest rate.
It is only paid for up to two years if you are getting income-based jobseeker’s allowance.
Contact Jobcentre Plus or the Pension Service to check whether you’re eligible and to claim.
Mortgage rescue scheme
The government has also introduced the mortgage rescue scheme in England through local authorities to help people with priority needs, such as pregnant women or people with dependent children, at risk of repossession.
You must have a household income of less than £60,000 a year to qualify and meet other conditions relating to the value of your mortgage and home.
A registered social landlord (RSL) provides a loan in return for a share of the equity in the property to reduce your mortgage payments, as long as your mortgage is worth no more than 75% of your property’s value.
Alternatively, the RSL buys your home for 97% of its market value and clears your mortgage. You pay a reduced rent to it to carry on living in your home instead.
The house owner must be subject to a possession order
Priority will be given to families especially those with dependant children or caring for vulnerable family members in a single home
Priority will be given to those in a home with an adaptation which costs more than £9,500.
There will be no support offer to property owners who under occupies by two bedrooms or more
You can find out about the scheme by contacting your local council or being referred to it by an advice agency, such as citizen advice, your mortgage lender or the courts.