Face losing your home?
The idea of losing house can give shudders to any house owner. No right thinking man would ever land in such a situation where he has to lose his home. But there are few circumstances wherein a situation may arise when you might lose your home unless you try various options to salvage the situation. Such situation arises when you are unable pay you home loan mortgage. A mortgage is the pledging of a property such as home to a lender as a security in order to obtain a mortgage loan. Missing even one or two installments can lead to serious problem if the lender is not so lenient. He might insist on mortgage foreclosure which means legal proceedings in which a mortgagee or a lender obtains a court order with right to terminate equitable rights to redemption of the mortgagor. Simply put, mortgage foreclosure prevents home owner from enjoying any equity gains arising from home that has been mortgaged. A home owner is prevented from earning rent, remortgaging or even selling or auctioning his home.
In such unsavory situations, some steps can be initiated once it is clear that there are chances of losing your home.
In the early stages of default process, you can save yourself from brink as you might have missed not more than one or two monthly payments. Lenders also must not have spent more money to get back their dues. You can try to pay of the debt. But as the foreclosure process gains momentum, the size of the debt owed increases substantially as it also includes bank legal costs which are added to your account. If things work out at this stage then fine. If the debt amount cannot be paid and the lender applies for foreclosure then you need to think of ways to keep your house or at least get some benefit from it so that you can later buy another house.
The first thing you can do is sell the house fast before the lender initiates any process of foreclosure. Thus, you get some amount with which you can buy a new house if possible, or can get a mortgage against the same. The buyer of your house, the new owner of the house, also inherits the mortgage along with it ,and he might be in position to pay back the mortgage. Another option is to apply for remortgage with other lender. This new lender pays mortgage installments due to the former lender and thus, you get to keep your home too. You can also opt for a property auction to sell your house. You can auction your property online to speed up the process.
If you want to sell but remain in your home, then you can always opt for a sell and rent back schemes offered by many property dealers and mortgage companies. This way you have a roof over your head, escape from being homeless and stay in your own home. The only difference is that you have to pay rent to the company who has provided you such scheme. On the brighter side, you can again buy when you are out of woods provided the company agrees. One has to be careful while opting for sell and rent back scheme as it does not suit everyone who is struggling with mortgage arrears.
Suppose all this does not workout and the lender actually goes for foreclosure and the case is admitted by court of law. Though the legal process is long and tiring, there is risk of losing your home once the case turns lender’s way and the court allows repossession of home. This means a financial institution or a lender takes back home that was used as collateral while providing mortgage loan. Once the court proceedings are invoked the house owner loses right of possession. He losses rights of ownership to his house at the beginning while accepting mortgage on his house. So, in this scenario, a home owner should try his best to stop repossession.
Repossession can be stopped easily at any time. It is pertinent to first try to sort out the matter with lender. You can delay or stop repossession process by proving in the court of law that
1. You are able to pay your mortgage each month. You can show salary slip from employer or state any other income source to convince the court for delaying the proceeds.
2. You can pay off mortgage by selling some other assets. You can show proof of this to court and stop repossession.
3. You can opt for remortgage with other lender and show this proof to ward of court proceedings.
By using all these options, you can stop repossession and keep your house.
It is well-known fact that these methods and ideas cannot be followed by everyone. To help out such house owners who do not have much idea about all these methods and process, free debt advice are provided by many companies who specialize in such matters. All financial institutions and lending institutions also provide such free debt advices to their customers. Debtors in UK take help of Individual Voluntary Arrangement (IVA). IVA advice is sought for debt solution that helps in avoiding going through the severity of repossession or bankruptcy. IVAs are legally binding agreements where in borrowers get opportunity to put a freeze on interest rates and make lower repayments.